Investment Column: Investors can count Safestore as a safe bet

Raven Russia; UTV Media

Our view: Buy

Share price: 122p (+12.75p)

The Bank of England announced a small rise in mortgage lending yesterday, no doubt giving some cheer to the self storage sector, which, in the case of Safestore Holdings and Big Yellow, has seen share prices slip by about a fifth in the last six months.

Any nervousness about the industry has been caused by weak consumer confidence and more general doubts about house prices. Safestore, however, will be hoping that yesterday's encouraging third-quarter update will steel any investors that are starting to look around for a safer punt.

The company, which provides storage to more than 44,000 customers, said that revenues grew by 9 per cent on higher occupancy, and that it expects to hit full-year targets, sending the shares up by 11.7 per cent. The upbeat outlook comes despite the group warning that the fourth quarter is usually weak for occupancy growth as students return to university.

For investors that like a bit of risk, there is inherent value in the company. The 4.3 per cent dividend yield alone would be enough to make us part with our money, especially as the returns are about two times covered, according to the watchers at Evolution Securities. Trading on a price-earnings ratio of 12.5 times, falling to 11.5 times next year, the shares do come at a discount to the rest of the sector, making them, in our view, a worthwhile bet.

And while the mortgage numbers were somewhat lacklustre, we are also pleased to see that Safestore managed to increase its customer numbers by more than 10 per cent, against the numbers achieved last year.

We think the sector may have a tough time of it in the coming months, but there is enough evidence to suggest that Safestore is well set to deal with some nasty bumps. Buy.

Raven Russia

Our view: Buy

Share price: 48.5p (-0.5p)

Investors fancying a dabble in the Russian property market could do worse than Raven Russia. The Guernsey-based group specialises in commercial property in Moscow and St Petersburg, and after an initial development phase – buying the land and building the facilities – is now in full swing finding tenants for its warehouses.

The stock is not without risk, particularly given the recent state of the Russian economy. But so far this year, progress is "excellent" and both yields and rents are "moving in the right direction", according to chairman Richard Jewson.

Half-year results published yesterday recorded an additional 145,000 square metres of space let in the last six months, giving the group an annualised net operating income of $82m (£52m), up from $70m last year. Another $10m-worth of agreements are in the pipeline, in itself enough to get the company over the $90m threshold, at which point it becomes cash positive and can focus on boosting shareholder dividends.

Beyond that, there's another $33m-worth of space on the group's books, and the management certainly talk a good game about its prospects. It points to new contracts with Alliance Boots and Russia's Dixy retail chain, as well as existing clients expanding their operations, as evidence of the improving market. And they are sufficiently confident to be proposing a buy-back at a 9 per cent premium to help boost the currently discounted share price.

Russian property is not for the faint-hearted. But for investors looking for some interesting diversity, Raven Russia is worth a punt. Buy.

UTV Media

Our view: Buy

Share price: 113p (+7p)

The World Cup means many things to many people. To UTV Media, the group that owns TV channels and radio stations, it meant an almost 50 per cent jump in profits at its flagship radio station, talkSport.

As well as football's showpiece, the group cited the better economy as helping to lift total revenues 9 per cent to £59.2m. Pre-tax profits also rose 17 per cent to £9.4m. Chief executive John McCann said the improvement during the first half also "appears to be continuing in the third quarter". The group has also managed to turn round the loss-making Sport Magazine, which it bought last year.

Although its Irish radio unit was hit by the "difficult economic environment," it believes the division will be profitable in the third quarter.

UTV predicts revenues will be 10 per cent up overall in the third quarter, and it has continued to reduce its debt pile. While investors should be wary that a slide in the economy could see revenues suffer, at Investec analysts' estimated price of 6.9 times full-year earnings, this stock looks worth buying.