Digital Realty Stock Gains 12.7% in 3 Months: Will the Trend Last?

Core Viewpoint - Digital Realty (DLR) has experienced a stock price increase of 12.7% over the past three months, contrasting with a 9.8% decline in the industry, driven by strong demand for data centers and a solid operational foundation [1] Group 1: Market Demand and Growth Drivers - The growth in cloud computing, the Internet of Things, and Big Data is fueling a booming market for data-center REITs like Digital Realty, with the company signing $521 million in new leases in Q3 2024 [2] - Digital Realty has a high-quality, diversified customer base, primarily consisting of investment-grade tenants from various sectors, ensuring stable revenue generation [3] Group 2: Strategic Investments and Development - The company is expected to continue its growth trajectory through strategic investments in land, infrastructure, and acquisitions, including a recent acquisition of a 6.7-acre parcel in Richardson, TX, for approximately $15 million [4] - Digital Realty has a robust development pipeline, with 9.1 million square feet under active development and 4.9 million square feet held for future development, expecting capital expenditures of $2.0-$2.4 billion for 2024 [5] Group 3: Financial Strength - Digital Realty maintains a solid balance sheet with $2.18 billion in cash and cash equivalents as of Q3 2024, a well-laddered debt maturity schedule, and no debt maturities until early 2025 [6] - The company's net debt-to-adjusted EBITDA ratio stands at 5.4X, with a fixed charge coverage ratio of 4.1X as of the end of Q3 2024 [6]