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Top Picks 2020: Americold Realty Trust (COLD)
01/07/2020 5:00 am EST
Americold Realty Trust (COLD) — our top conservative idea for the coming year — is a real estate investment trust that successfully completed its $834 million IPO in January of 2018, recalls Eddy Elfenbein, editor of Growth Stock Advisor.
Americold is the largest global and U.S.-based real estate investment trust focused on the ownership, operation, development and acquisition of temperature-controlled warehouses, which are an indispensable component of the food industry infrastructure.
The company owns and operates 176 temperature-controlled warehouses, with over one billion refrigerated cubic feet of storage, in the United States, Australia, New Zealand, Canada and Argentina.
Led by the millennial generation’s love of online shopping, research suggests that 70% of U.S. consumers will shop for at least part of their groceries through the internet in the next seven years.
With consumers embracing online grocery shopping, demand for cold storage facilities for storing frozen goods is rising. That is forecast to lead to a need for greater U.S. cold storage space by perhaps in excess of 35 million square feet, according to research from the industrial real estate firm CBRE.
This number may turn out to be a lot higher when you consider the steady rise in the number of consumers dining out goes hand in hand with additional demand for fresh produce, meat, poultry and fish.
That in turn also increases the need for refrigerated warehouses in cities across the U.S. Couple that with the demographic shift to more urban locations and the ever-increasing U.S. population, and the need for more cold storage buildings becomes obvious.
Refrigerated warehouses account for most of the company’s revenues (74%) and its customer list is a who's who of the food industry including the likes of Unilever, Conagra, Danone, Lamb Weston and KraftHeinz. And among the food distributors, its list of clients includes Kroger, Safeway, Trader Joe’s and Whole Foods.
I want to emphasize to you again the uniqueness of its business. Americold owns temperature-controlled, mission critical infrastructure and leases it to more than 2,400 different food manufacturers and grocers.
The company also provides the customary services necessary to properly preserve their goods and facilitate the movement from the point of manufacture through the supply chain to the point of consumer acquisition.
Here’s an important stat: 96% of all the frozen food that you find in the grocery store comes through some company like Americold. The food manufacturers don’t do this themselves, nor do they invest in that infrastructure. It’s left to specialists like Americold.
I expect Americold to even build on its lead as number one in the sector. That will be good news for investors because of the growth in the refrigerated warehouse sector.
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