Mobile Mini: Risk May Be Overly Discounted

| About: Mobile Mini, (MINI)
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On April 9, The Wall Street Transcript interviewed David Gold, a Senior Equity Analyst covering business services, including consulting, real estate services and leasing companies at Sidoti & Company, LLC. Key excerpts, including his sector pick, follow:

TWST: Are there any names outside these two spaces that you cover that you like?

Mr. Gold: We like Mobile Mini (NASDAQ:MINI). They rent portable storage containers to the construction industry, retailers and hospitals. They made an acquisition last year in Europe, and in the eight months that it was a part of their business, they saw 25% growth. The growth was so strong that they've decided to invest more money in that business. So it won't be a big bottom-line contributor in 2007, but likely will be in 2008 and more so in 2009. In terms of the valuation, it's pretty compelling, trading at about 15 times 2008. The reason for that is that 40% of their business derives from non-residential construction, and we think investors fear that that business, which has been a robust grower, is going to tail off dramatically. We're certainly conscious of it, but we think that risk is overly discounted.

TWST: Where are their growth opportunities longer term?

Mr. Gold: Historically, they have acquired domestically. They have made small acquisitions and introduced their model, and the implementation of their model has boosted growth to the mid-teen to low 20% range, but the longest-term growth opportunity is Europe. They've really just entered Europe. MINI's model involves shifting the focus from container sales to leasing at the locations that they acquire, and that has historically worked well in the US.

TWST: Is there a similar market in Europe for this type of product?

Mr. Gold: There seems to be, and interestingly enough, a lot of MINI's business has been educating the public or educating a retail store management that for $100 a month, they can have additional cheap storage by way of a 20 by 40 container. So they've done a good job of building awareness, and we are starting to see evidence of growth on the top line, but not yet much on the bottom line due to additional investing. Over time, we expect the investments to bear fruit by way of long-term profit growth.