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Tickers in this Article: IRM, CTAS
In a bid to strengthen its storage business, Iron Mountain Inc. (IRM) has acquired three companies - IG2 Data Security Inc., DATAPROS Storage and Staffing LLC, and Data Backup Inc. All these three companies provide data storage and protection. However, further details not disclosed. IG2 Data Security provides data protection and backup tape storage services to its clients in Chicago, northwest Indiana and southeastern Wisconsin. In the Phoenix region, DATAPROS Storage and Staffing LLC offers media storage and management services, which also includes data protection. Data Backup Inc. is based in Sarasota and delivers data storage and recovery services.

Iron Mountain has been employing an aggressive acquisition strategy to supplement the organic growth in storage revenues. Iron Mountain has not only gained new customers from these acquisitions, but has also been able to expand its operations in new regions.

In mid 2012, Iron Mountain made several accretive acquisitions in the storage space (File House Offsite Record Storage, Document Systems Inc and First National Safe Deposit). We believe that the company will continue to pursue accretive acquisitions in this segment (both domestically and internationally) over the long term.

Storage is an integral part of Iron Mountain's revenue structure and contributes nearly 58% of its total revenue. In the last concluded quarter, Iron Mountain recorded marginal growth of 1.7% year over year.

We expect Iron Mountain to drive significant growth through acquisitions in fast-growing countries like Brazil, Russia, China and India, which will boost its international revenue going forward. We believe that diversification and expansion of its business will help the company to counter sluggish growth from the domestic and European markets over the long term.

However, tepid internal growth coupled with volatile foreign exchange rates and a decline in recycled paper prices are expected to partially negate the company's strong product portfolio, increasing market share and promising international business. The company also faces stiff competition from Anacomp Inc. and Cintas Corporation (CTAS).

Thus, we have a Neutral recommendation on the stock. Currently, Iron Mountain has a Zacks #3 Rank (Hold).

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