Frederick Moran, Director of Research at Burke & Quick Partners, says one of the stocks he is currently recommending is CyrusOne Inc (CONE). He says the company represents one of the best values, especially relative to growth.
“CyrusOne stumbled a little bit in terms of its topline growth in the first quarter, with revenue improvement of 11% year over year versus an expectation of a low-teens growth rate,” he says. “Then in the second quarter it dropped a bit further to 9%, but a lot of that was related to pass-through power costs, with energy costs going down, so it really didn’t affect their bottom line. CyrusOne did have upside surprise on both EBITDA and AFFO.”
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Moran says CyrusOne has lagged the group this year, but is starting to show some momentum as EBITDA and AFFO are reaccelerating, and the company’s $400 million acquisition has been completed and is likely to be accretive to the bottom line. Moran says management has raised its AFFO guidance, and he thinks the company could post $2.20 in AFFO this year and $2.55 next year, making CyrusOne one of the cheaper stocks in the group.
“They also have a dividend payout with a 4% yield, which is the third highest in the group,” Moran says. “And the combination of that with their excellent growth prospects, which includes a number of data center facilities that have existing shell capacity that could be built out to essentially double the amount of customer-related revenue it could handle, puts CyrusOne on an impressive growth track.”
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