I remember the days of loading a paper tape or punch cards into a device hooked up to my dad’s computers. The rolls of tape got larger until they turned to floppy drives, the hard drives.
It was around that time that my dad told me that one day, data would turn into the most valuable commodity in the market. He was right about that. Then he told me that the people that became the creators and the storers of the data would be among the most necessary.
He was right about that, too.
Data is king and there’s a great way to profit from it now that AI is on the upswing…
Today’s Fast Profit Stock is on one of the storers…
Iron Mountain (IRM).
If you’re not familiar, Iron Mountain started in the early days as a data depository. Companies would use their services for everything from document and data retention and management to long-term storage needs. Data became more voluminous over time, leading to Iron Mountain’s aggressive scaling that took place in the early 2000’s.
That was just the start. The new generative AI boom is ramping up the amount of data out there to be stored, pushing Iron Mountain and other similar data companies into a new multifaceted expansion. Of course, that expansion has benefitted the stock, growing more than 300% since the beginning of 2021.
There’s a long-term story here that sees Iron Mountain grow considerably faster than the S&P 500 over the next five years. For that reason, I continue to hold the shares as a long-term investment.
But the short-term potential for the stock to surge 15-20% over the next three months as a familiar technical pattern has been forming.
We’ll get to that in a minute. Let’s hit the fundamentals of the stock.
The “Walk Down Main Street” fundamentals are simple and strong. Growth in demand for storage and management have shot through the roof as AI applications generate multiples of demand for Iron Mountain’s services. This won’t slow anytime soon.
Revenue for the last five years reflects the market with an average year-over-year comparison of revenue growing at an average of 37%.
As expected, we’re seeing positive guidance each quarter from Iron Mountain’s management. Next quarter’s revenue guidance was about 2% ahead of Wall Street’s expectations and made for the eighth quarter in a row of positive outlooks from the company.
From a technical perspective, Iron Mountain shares have been in a consolidation pattern for the last three months. That consolidation came after an aggressive move higher on the tails of the company’s fourth-quarter earnings beat in January.
Shares rallied 10% over 13 trading days in the wake of the company’s results and outlook, pushing IRM stock to new all-time highs.
Ahead of those earnings, IRM stock sat in a similar consolidation to what we’ve seen more recently, which leads to my shorter-term outperformance outlook.
The recent consolidation of the stock’s price has created a “compression” factor that suggests a breakout to higher prices is building. But there’s more.
Just below its current price, IRM’s stock has completed a bullish technical pattern.
Just last week, the stock’s 20-day moving average moved above its 50-day moving average. This pattern is known as a “Silver Cross.” Historically, a Silver Cross suggests increasing buying momentum that leads to a breakout to higher prices.
There’s one more catalyst feeding my bullish outlook for the stock, the potential for a short squeeze.
The recent consolidation I’ve described was met with an increase in short interest on Iron Mountain stock. This suggests that the bears are positioning for a sharp decline in the stock.
Currently, the short interest ratio for IRM stock stands at 7.0 after a slight increase in traders betting against the stock over the last two weeks.
I like the increase in short interest for two reasons.
First, it suggests that the stock is seeing signs of pessimism towards it. I always point out that stocks climb a “wall of worry,” well increasing short interest is always a sign of more bricks in the wall.
Second, the increase in short interest suggests that we may see a short-term short squeeze.
A break above $85 is likely to trigger those shorts to begin closing their positions out which is done by them buying shares in the market. That, of course, helps to drive prices even higher.
Here’s how I trade Iron Mountain.
For long term investors: Iron Mountain is a great long-term hold for most investors’ portfolios.
The stock pays a healthy 3.25% dividend yield while averaging more than 30% a year in growth over the last five years. I expect those returns to continue as the generative AI boom continues to generate more business for Iron Mountain and its competitors.
Purchasing the stock as a long-term hold is the simplest way to benefit from this growth and income opportunity.
For those that have been educated on the use of long-term options, the IRM January 16, 2026 $85 Calls currently trade for $8.70 per contract. This option provides long-term growth along with the potential to leverage a 30% gain over the next year to gains of 143%. That return is based on a calculation of the value of the option one year from today with the stock trading at $104.
For the short-term traders: I still like the stock as a long-term hold and would use the leveraged LEAPS approach. In addition, I would consider the purchase of the IRM October 18, 2024 $80 call to take advantage of the short-term price target of $90.
This option currently trades for $4.80. A move to $90 ahead of the option’s October expiration date would more than double the option’s value. A move to the same target over the next six weeks (July 4) would result in a calculated value of $11.45 for the option, a 138% gain in the option’s value.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.