10 Best Information Technology Stocks To Watch Right Now

10 Best Information Technology Stocks To Watch Right Now: Iron Mountain Incorporated(IRM)

Iron Mountain Incorporated, together with its subsidiaries, provides information management services primarily in North America, Europe, Latin America, and the Asia Pacific. The company offers records management services, including records management program development and implementation based on best-practices to help customers comply with specific regulatory requirements; implementation of policy-based programs that feature storage for various media comprising paper; flexible retrieval access and retention management; hybrid services to help organizations gain control over their paper records; and specialized services for vital records and regulated industries, such as healthcare, energy, government, and financial services. It also provides data protection and recovery services, such as disaster preparedness; off-site vaulting of data backup media for data recovery in the event of a disaster, human error, or virus; online backup and recovery solutions for desktop and la ptop computers, and remote servers; and technology escrow services to protect and manage source code and other proprietary information. In addition, the company offers information destruction services that primarily consist of physical secure shredding operations; and is involved in the shredding of sensitive documents to third-party recyclers. Further, it provides fulfillment services that assemble custom marketing packages and orders, as well as provide reporting on customer marketing literature inventories; and professional consulting services to develop and implement comprehensive records and information management programs. Iron Mountain Incorporated serves commercial, legal, banking, health care, accounting, insurance, entertainment, and government organizations. The company was founded in 1951 and is headquartered in Boston! , Massachusetts.

Advisors' Opinion:

• [By Ben Levisohn]

  Last week, the IRS gave Iron Mountain (IRM) what it wanted: REIT status. Since then, the storage company’s shares have jumped 18%–and JPMorgan thinks they could head higher.

  AP

  JPMorgan’s Andrew Steinerman and Jeffrey Volshteyn explain why they now rate Iron Mountain Overweight:

  Iron Mountain announced that it achieved IRS approval for REIT status retroactively as of January 1, 2014, completing a process that began in 2012. Iron Mountain stock leaped 20% on Thursday due to the large cash tax savings and the resulting increased dividend. We still see continued upside due to valuation as yield-oriented and REIT investors are attracted to Iron Mountain. While we recognize that Iron Mountain will not prospectively trade at a full real estate valuation (due to the services side of their business), the REIT structure should help highlight the sizable valuation gap that exists today and should narrow over time.

  Iron Mountain is much cheaper than the industrial, self storage and data center REITs that carry dividend yields of 3.6%, 3.3% and 4.6% respectively. We believe the dividend yields of prison stocks (also non-traditional REITs), which have dividend yields of 6.3%, provide downside protection to Iron Mountain.

  Prison REIT Corrections Corp of America (CXW) yields 6.2% and trades at 24.9 times earnings, while Geo Group (GEO) yields 6.4% on a P-E ratio of 20.8 times.

  Shares of Iron Mountain have, while Correction Corp of America has and Geo Group has.

• [By Ben Levisohn]

  Think of Iron Mountain (IRM) as any heavy metal band after Nirvana broke in 1991. Suddenly, a way of playing music that had been wildly successful was looked at as an anachronism and bands like Metallica cut their hair, wore flannel and did just about anything they could think of to fit in in a changed world.

  Getty Images/Lonely Planet Image

  That’s Iron ! Mountain ! today. It has a business that was once fantastic–storing paper files for corporations. But in a digital world, that business is passé, even if it still brings in tons of money. Sure, Iron Mountain is doing everything it can to change its stripes–offering digital services, trying to morph into a REIT–but Iron Mountain is still what it is.

  And that’s a struggling business.

  On Friday, Iron Mountain released financial results and promptly fell 4.3%, as its earnings and revenue were in line with analyst forecasts but Iron Mountain’s North American storage growth turned negative, perhaps for the first time ever, notes Jefferies’ Dan Dolev and Trevor Young.

  So what now? Dolev and Young don’t think emerging markets can fix what ails Iron Mountain:

  It was encouraging to see international storage internal growth decelerate only slightly (-20bps to +6.3%) as it faced +70bps tougher compares…Is the strength sustainable? We are hopeful, but are not holding our breath given that 1) 4Q storage internal growth in developed international markets (e.g. Western Europe) was already below the FY average (+2.2% vs. +2.5% for the FY), and 2) although 4Q EM storage internal growth accelerated (+13.4% vs. +13.2% for the FY), history suggests that EMs can skip decades of technology evolution and upgrade directly to the newest technology (e.g. smartphones in China).

  Dolev and Young also doubt Iron Mountain’s M&A strategy. They explain why:

  With FY13 global storage internal growth 3x slower than during the Great Re

• [By Ben Levisohn]

  Iron Mountain’s (IRM) story is now well known. Beset by a secular decline in its paper storage business, Iron Mountain has bet that a conversion into a real-estate investment trust can cure what ails it, by attracting investors interested in its potential yield. The IRS hasn’t seemed too willing to let Iron Mountain become a REIT, but the fact that it could is most like! ly all th! at stands in the way of the stock and a lower share price. And so Iron Mountain remains range bound, as investors wait to see what the IRS will do.

  Getty Images

  But maybe even the REIT conversion won’t be the savior Iron Mountain–and its investors–hope it will be. Jefferies’ Dan Dolev and team explain:

  The outcome of the IRS’ ruling is difficult to predict, but our analysis shows a potentially more muted upside and a bigger downside than many believe. A favorable ruling could trigger a short squeeze, somewhat offset by Event Driven Hedge Funds liquidating. An influx of REIT investors is possible, but our analysis shows that many already own [Iron Mountain]. Alternatively, an adverse ruling could steer attention back to weakening fundamentals, potentially leading to the P/E’s of IRM (24x) and Recall (13x) converging.

  Given an already tentative adverse ruling, the bar is high for [Iron Mountain] to convince the IRS that its racking structures are indeed real estate. The IRS would have to ignore its 1975 revenue ruling that it has relied on heavily for nearly 40 years. Even if [Iron Mountain] became a REIT, there is still no guarantee that REIT dedicated investors would buy the stock, especially given rising secular concerns.

  Shares of Iron Mountain have dropped 2.1% to $25.86 at 3:47 p.m.

• [By Ben Levisohn]

  Iron Mountain (IRM) has bet heavily that it’s conversion to a real-estate investment trust would arrest its declining share price. But Don’t count on a permanent benefit without major changes, according to a Jefferies report released today.

  Jefferies’ Dan Dolev and Trevor Young explain:

  For many years, the durability of IRM’s paper storage business (74% of GP) has made it synonymous with stability, but our proprietary survey highlighting a dramatic decline in paper storage intentions is concerning. Data centers are a step in the right direction, but to ensure long-term! viabilit! y, IRM needs a comprehensive plan to diversify away from storing paper…

  REIT status does not affect fundamentals, but a 2x dividend could bring short-term respite to the shares. Only the IRS knows if IRM would become a REIT; however, if it does, the stock would surely rise on the prospects of a $2+ dividend (~2x C-corp.).

  Dolev and Young started Iron Mountain with a Hold rating and a $27 price target. Shares of Iron Mountain have dropped 1.7% to $29 today at 2:41 p.m.

source from Top Stocks For 2015:http://www.topstocksblog.com/10-best-information-technology-stocks-to-watch-right-now.html