Mobile Mini (MINI) is in the space business, and it's making oodles of money. No, not rockets: It provides the large containers that retailers, hospitals, and government agencies need for storage. Mobile buys used containers from shipping companies, refurbishes them, and leases them out. Mobile has about 60,000 containers leased for an average of $125 a month. Among its customers: Wal-Mart Stores.
"Mobile is one of our biggest holdings, and it has been a big winner," says Michael Durante of John McStay Investment Counsel, which manages $6 billion and owns a 7% stake in Mobile. Container storage has been "exceptionally profitable," with giant margins of 45% to 50%, he adds.
Mobile's stock has been on fire despite the poor market, jumping from 18 in December to 29 now. "It is really a cash-flow story," says Durante, who notes the storage units don't depreciate and keep on bringing in cash. Based on First Union's 2002 cash-flow estimate for Mobile of $4.15 a share, the stock is trading at 6.9 times cash flow. "But Mobile is growing at three times that rate," says Durante. He sees the stock at 60 in a year. It trades at 17 times 2002 estimated earnings of $1.70, and 20 times 2001 estimate of $1.40. Mobile earned $1.11 in 2000. By Gene G. Marcial