Trade of the Day: Store Some Trading Dollars in CUBE Stock

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CubeSmart (CUBE) — This real estate investment trust (REIT) owns, operates, acquires and develops self-storage facilities in the United States. It is one of the largest owners of self-storage space in the country and has broad geographic diversification.

Capital IQ has a positive view of the self-storage industry given its economic outlook for continued low interest rates and a liquid property market. In early August, its analysts raised their 12-month price target for CUBE stock by $2 to $28 and maintained their “buy” rating.

And Bank of America Merrill Lynch analysts reiterated their “buy” rating on CUBE stock and boosted their price objectives for several self-storage REITs. In the case of CUBE stock, they increased their target by $1 to $30. They consider the sector to have strong fundamentals and said it should benefit from “increased demand from an improving economy.”

The Street’s consensus estimate is for earnings to jump nearly 17% to $1.20 per share in 2015, and increase another 10% to $1.32 in 2016.

CUBE stock traded in a consolidation wedge from late January to July, when it broke from support at its 50-day moving average, then at about $24. In six weeks, it jumped to a new high at $26.81 on Aug. 17 before succumbing to profit-taking and the broader market sell-off.

On Wednesday, a buy signal was triggered by my proprietary indicator, the Collins-Bollinger-Reversal (CBR), and CUBE stock jumped from $24.50 to around $26. During the recent market adjustment, in contrast to many other quality stocks, CUBE stock has retained its uptrend.

Try to buy shares under $24.50 with a four-month price target of $30, which would result in a gain of more than 20%. Long-term investors may wish to hold CUBE stock for further appreciation, as well as for its solid dividend yield of 2.5%.

CUBE Stock Chart
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