The future is yellow

UK self storage company Big Yellow Group PLC reported full year results yesterday. Results were strong (revenue up 31%, profit up 240%) but the outlook is cautious. A large chunk of Big Yellow's business comes during house buying transactions so if the housing market slows down they will be affected.

However I was more than happy with what I saw. Big Yellow have room for years and years of growth in the UK as the self storage market is relatively new. Their properties are worth 186p per share which gives the share price a safety net. Growth is organic and most of England (North and Midlands) has not been covered yet. The profit margin is an astounding 66%.

This is one company I have liked since I first looked at its website. The business model is simple and effective, the brand is consistent, the financials are strong and the management look good. There are competitors around but I think Big Yellow are well placed to generate cash for shareholders for many years to come.

Big Yellow are the only real estate and the only small cap holding in my portfolio. As such they provide diversification and a bit of education as I have never owned a small cap before.

This is one to hold on to for a long time.