Safestore Holdings(LSE: SAFE) was trading down in Thursday business despite the release of impressive trading numbers. I think the market may be missing a trick here.
The self storage company announced that group revenues leapt 10.4% during the three months to January, to £35.1m, while on a like-for-like basis sales improved 5.5%.
Concerns have been doing the rounds for some months now, with Britons' spending power under increasing strain, that demand for Safestore's rooms would suffer an inevitable decline. But this scenario has so far failed to materialise -- in its home market, like-for-like occupancy actually improved 2.8% year-on-year to 69.8%.
With occupancy in Paris also having improved by 3.1% in the period, to 78.5%, group like-for-like occupancy was up 2.8% at 71.5%.
Bright earnings outlook
While Safestore Holdings is expected to endure another heavy earnings decline in the year to September 2018 -- a 29% drop is currently predicted by City analysts -- I believe the storage expert is well worth consideration on the back of its perky long-term profits prospects.
Not only has the FTSE 250 play proved adept at thriving in a challenging environment, but its bright store pipeline gives me confidence that it can continue growing revenues at a healthy rate (it has four new sites in the offing in London, one in Birmingham and another in Paris).
What's more, Safestore also made a point today of highlighting its "strong and flexible balance sheet [which] allows us to continue to consider value accretive investments as and when they arise." The business has already snapped up UK rivals Alligator Self Storage and Space Maker over the past couple of years.
Safestore is expected to get earnings rolling again with a 6% rise in fiscal 2019. It may be expensive on paper, the company sporting a forward P/E ratio of 18.9 times, but this is not an encumbrance given the possibility of forecast upgrades in the months ahead.
Aside from Safestore's fast-improving earnings story, the Hertfordshire firm's progressive dividend policy gives another reason for share pickers to take a look (it has raised dividends at a compound growth rate of 19.5% over the past five years).
Last year's dividend of 14p per share is expected to rise to 16.1p this year, and again to 17.1p in fiscal 2019. Such predictions yield a chunky 3.2% and 3.4% respectively.
Another income hero
Those on the lookout for delicious dividend growth had also better give Greggs (LSE: GRG) some close attention.
With the baker pledging to speed up store openings, earnings growth is expected to click through the gears in the years ahead, meaning that last year's predicted 1% bottom-line improvement is anticipated to speed up to 7% in 2018 and again to 10% next year.
And as a consequence dividend expansion is expected to step up a notch. The predicted 32.4p per share reward for 2017 is expected to rise to 36.2p in 2018 and to 40.9p in 2019, resulting in handy yields of 2.8% and 3.1% respectively.
Now Greggs might be expensive. But a prospective earnings multiple of 19.4 times is hardly outrageous given its proven ability of keep the tills ticking over - like-for-like sales have risen for an impressive 17 quarters on the spin now despite operating in a highly-competitive marketplace. I reckon the sausage roll star is a great pick for income and growth hunters alike.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.