As we all prepare for Thanksgiving… You can thank Clarence Birdseye for the frozen turkey sitting in your refrigerator.
During his work as a fur trapper in Newfoundland, Canada, in 1912, he noticed something… The frozen fish from Inuit fishermen wasn’t mushy. In fact, it tasted fresh even when defrosted months later.
The reason was simple – the fish they pulled out of the water froze almost instantly in the sub-zero Arctic weather.
Inspired by this, Birdseye later invented a machine for flash-freezing food. That launched an industry that’s worth more than $70 billion today.
But flash-freezing was only the first step. The industry built around storing transporting these goods wouldn’t be possible without a network of highly specialized infrastructure assets: cold storage warehouses.
These temperature-controlled buildings keep food frozen as it moves from the farm to the supermarket.
And despite an industry that’s nearly a century old, demand for cold storage warehouses is growing faster than ever…
Here at Intelligent Income Daily, we’re focused on finding the safest income investments on the market. When major trends emerge, we pay attention… and look for ways you can profit.
Today, I’ll explain why demand for cold storage warehouses is growing so quickly. And I’ll show you how to profit from this situation while collecting a reliable yield.
The Reason Behind This Rise in Demand
Americans have a lot more freezer space than even just three years ago.
According to a study by the American Frozen Food Institute, 29% of consumers have bought an additional refrigerator or chest freezer since the pandemic began.
In 2020, sales of frozen foods increased by a stunning 22% over the previous year. And they’ve continued growing every year since.
Frozen food has a few advantages over fresh produce and food…
It lasts longer. That means less is wasted due to spoilage.
It’s convenient. Many are ready to eat or can be cooked with little preparation.
And it can be healthier. Frozen vegetables lock in vitamins right after harvesting and have more nutrients than “fresh” vegetables in the produce section.
The rising demand for frozen foods is increasing the need for cold storage warehouses.
And it’s not just demand for frozen foods, but how customers are buying them.
Since it’s consistent and doesn’t need to be inspected in person, more and more consumers are buying these goods online.
In warehouses for traditional brick-and-mortar retail stores, products are densely packed onto pallets. But for e-commerce, workers and robots have to constantly pick out products and pack them for shipping. That requires up to three times more space.
A recent report from Grand View Research forecasts that the cold storage market will grow at a 13.3% rate from 2023 to 2030.
But cold storage warehouses are difficult to build. They require heavy insulation and specialized refrigeration machinery. According to JLL Research, the average age of cold storage warehouses is 42 years. More than 78% were built before 2000.
That means modern energy-efficient and automated cold storage warehouses are in short supply…
Two Ways to Profit From Increased Demand for Cold Storage Warehouses
One company that is positioned to profit big time from this trend is Americold Realty Trust (COLD).
Americold is a real estate investment trust (REIT) that runs 243 cold storage warehouses.
These are mission-critical infrastructure assets for some of the biggest companies in the world. Americold’s tenants include Unilever, Nestle, Conagra Brands, General Mills, Kraft Heinz, and Walmart.
The company’s top 25 customers have been leasing from Americold for an average of 36 years.
And Americold’s contracts give it steadily increasing income.
The thing we love most about REITs is they’re required to pay at least 90% of their taxable income as profits to shareholders. And Americold is no exception…
The cold storage giant yields 3.4%, and its shares trade at 21x adjusted funds from operations (AFFO).
This financial metric gives investors a picture of the cash a REIT has available for distribution to shareholders.
Americold has also historically traded at 28x AFFO. That means right now, you can buy Americold at a 25% discount and generate growing income as demand for cold storage warehouses continues to rise.
And cold storage isn’t the only REIT sector that’s seeing increasing demand…
Another way to profit from more online shopping this holiday season is with one of my favorite plays in the market right now.
I call it “Amazon’s Secret Royalty Program.” It’s a little-known way to collect a royalty-like income stream from the warehouses Amazon needs to support its growing empire. To find out more, read on here.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily