So, you want to start saving in your Registered Retirement Savings Plan (RRSP). That’s great! But if you’re nearing 50, it might take some strong investing to reach that median of $70,000. Or even the $150,000 average between 45 and 54 years of age. Yet, if you’re aiming to meet or surpass the average RRSP balance by 50, investing in mid-cap stocks with strong growth potential can help accelerate your progress.
One stock that fits the bill is StorageVault Canada (TSX:SVI), a dominant player in the self-storage industry. While self-storage might not be the flashiest investment, it’s a business that thrives in both good and bad economic times. With Canadians moving frequently, downsizing, and needing extra space, demand for self-storage remains steady, making it a compelling long-term investment.
The numbers
StorageVault isn’t just a small operation. It owns and operates more than 230 storage locations across Canada, offering both self-storage units and portable storage solutions. With over 11.8 million square feet of rentable space, it’s positioned itself as a leader in the Canadian storage market. The company also consistently expands through acquisitions, strengthening its footprint in a fragmented industry.
In its most recent earnings report for the third quarter of 2024, StorageVault posted revenue of $79 million, marking a 4.2% increase compared to the same period in 2023. While revenue growth is positive, the company did report a net loss of $7 million, mainly due to non-cash expenses like depreciation and amortization. Investors should note that while StorageVault has been expanding rapidly, profitability remains a challenge, especially as interest rates impact borrowing costs for further acquisitions. However, its core business remains strong, with steady demand for storage services supporting future revenue growth.
Looking at past performance, StorageVault has shown resilience in an industry that continues to expand. Its revenue climbed from $261.8 million in 2022 to $288.7 million in 2023, representing a solid 10.3% increase. Even in a higher interest rate environment, the company has maintained steady growth, demonstrating its ability to adapt and scale. With a business model that generates consistent cash flow and a service that meets long-term consumer needs, StorageVault continues to prove its value as a mid-cap stock with strong fundamentals.
Looking ahead
For investors looking to grow their RRSP, StorageVault provides exposure to the real estate sector without the high volatility of individual residential or commercial real estate investments. Self-storage is often seen as a recession-resistant industry because people need storage solutions regardless of economic conditions. Whether individuals are downsizing, moving, or decluttering, self-storage remains a necessary service which provides a level of stability that many other industries lack.
Now, StorageVault does offer a dividend, but it’s relatively small, with a recent quarterly payout of $0.0029 per share. While the yield isn’t significant, it does provide a small income stream that can be reinvested. More importantly, the company’s focus has been on reinvesting cash flow into expansion rather than paying out large dividends, which is typical for a growth-oriented business. Investors who prioritize capital appreciation over dividend income may find StorageVault an attractive addition to their RRSP.
Like any investment, StorageVault isn’t without risks. The company operates with a high level of debt, which is common in capital-intensive industries like real estate. Its debt-to-equity ratio is substantial, meaning it relies heavily on borrowing to fund its growth. If interest rates remain high for an extended period, this could put pressure on future profitability. Additionally, while the self-storage industry is growing, increased competition or regulatory changes could impact StorageVault’s ability to maintain its market dominance.
Bottom line
If you’re looking for a mid-cap stock that offers a mix of stability, long-term growth potential, and exposure to the real estate sector, StorageVault Canada is worth considering for your RRSP. While it may not deliver rapid short-term gains, its steady expansion and strategic acquisitions position it as a strong contender for investors focused on building wealth over time. As always, conducting your own research and ensuring the investment aligns with your financial goals is essential before making any decisions.
