Americold (COLD) REIT: 8%+ dividend, cold-storage moat, top tenants; margin & energy risks
Seeking Alpha· 319 words · 2 min read
Spikes in energy costs this year could have a downside risk to this particular type of REIT, which depends heavily on electricity powering temperature-controlled storage.
Springtime is about new beginnings, so today's article is my first coverage of none other than a cold-storage industrial REIT, a niche within REITs that I have given little to no attention so far but certainly deserves it, and I'll show why.
Americold Realty Trust (COLD) is a global leader in temperature-controlled logistics and real estate, supporting the safe, efficient movement of food worldwide, according to its business profile, and I'll also be exploring some points from its mid-February earnings results, where it beat estimates.
For my fellow dividend investors, one can't ignore the dividend yield above 8%, either, so my holistic 8-point analysis today also looked into dividends more closely as well.
For my initial rating of this stock, I called it a hold, agreeing with the Seeking Alpha quant system rating as of Sunday night, with the following rating worksheet visualizing how I got to that score:
The key strengths are expected macro demand globally for cold storage as a critical part of the supply chain, as well as an attractive balance sheet risk profile. However, hurting the bullish case were several factors, including share price technical trends/patterns, some weaker metrics vs. other industrial REITs considered, and only 5 years of dividend growth data.
In the category of macroeconomic environment, I was highly bullish on this stock due to a supply/demand imbalance, demand for cold storage, and market potential outside the US.
It is important to understand the highly specialized niche that Americold is in, besides the unique name and ticker symbol, as it sets it apart from many other REITs, even industrial/warehouse ones.
From its last investor deck (pg. 7), we can see that this type of REIT plays a critical role in the supply chain of products needing cold storage: