Why Iron Mountain Incorporated Stock Is Hiking Upward Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of storage and information management services company Iron Mountain Incorporated (NYSE: IRM  ) rose as much as 7.6% today following positive comments from Piper Jaffray.

So what: Piper Jaffray noted that the U.S. Federal Register published a new proposal from the IRS and the Treasury Department, which states: "The IRS and the Treasury Department recognize the need to provide additional published guidance on the definition of real property... ." This, if passed, would change the definition of a real estate investment trust, or REIT.

As reported by theflyonthewall.com, Piper believes the changes "provide a reasonable basis" for Iron Mountain's racking structures to be classified as qualifying "structural components." Structural components are a detailed part of the new proposal.

Piper reiterated an overweight rating along with a $37 price target on the stock.

Now what: If it passes, then even a part of Iron Mountain could qualify as a REIT would also potentially qualify for tax savings or other benefits. Currently, Iron Mountain has a large tax burden every quarter due to its ongoing profits. A good problem to have, mind you, but if the company can retain more of its operating income for shareholders, then it's even better.

Generally, one of the rules with REITs is that in order for a company to take advantage of the tax savings it would require distribution in the form of dividends to shareholders. The Street may be speculating today that if the proposal is passed, if Iron Mountain qualifies, and if Iron Mountain chooses to pursue this route, not only would earnings per share rise but dividend payouts would also go up substantially.

It's all quite speculative at the moment, which might be why Piper Jaffray failed to raise its price target on the news. It will be interesting to see how this develops, and it makes a good conference call inquiry for Iron Mountain management.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2957759, ~/Articles/ArticleHandler.aspx, 12/19/2014 3:00:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement