Shares of Iron Mountain (IRM -0.23%) jumped 10.1% in May, according to data provided by S&P Global Market Intelligence. A big catalyst was the real estate investment trust's (REIT) strong first-quarter results.

Capitalizing on the growing demand for data storage

Iron Mountain got off to a "strong start to 2025," commented CEO William Meaney in the REIT's first-quarter earnings press release. He noted that the company delivered "another record performance in Revenue, Adjusted EBITDA, and AFFO in the first quarter and above our expectations." Its revenue rose 8%, its adjusted EBITDA increased 12%, and its AFFO rose 8% (and by 6% per share).

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The company saw strong performance across its business. Its legacy physical storage operations benefited from stable demand. Meanwhile, its growth businesses (data, digital, and asset lifecycle management) collectively grew by more than 20% in the period. The company continues to benefit from its Project Matterhorn growth strategy, which is a multiyear plan to accelerate its growth. It has helped the REIT deliver 11% compound annual revenue growth and 9% compound annual AFFO growth since 2021. Its growth businesses have increased their revenue at a 28% compound annual rate during that period (compared to 6% for its legacy operations) and now contribute 28% of its yearly revenue.

Iron Mountain sees more growth ahead. Its strong performance in the first quarter and positive outlook led the company to increase its full-year guidance. It now expects its revenue and AFFO to grow by 11% at the midpoint of its forecast (up from 9%), with AFFO per share rising 10% (up from 8%).

A key aspect of the company's strategy has been investing in building data centers. The REIT currently has 29 data centers in 21 markets, serving over 1,300 customers. It has 424 megawatts (MW) of operating capacity, another 185 MW under construction, and an additional 671 MW of development projects in the pipeline. That large backlog puts the company in a position to grow its data center revenue at a more than 20% annual rate in the future.

Still a buy after last month's rally?

Iron Mountain's Project Matterhorn strategy has helped significantly grow shareholder value in recent years. The stock is up over 250% in the past five years. That has shares trading at around $100 or about 20 times AFFO at the midpoint of its 2025 guidance range. That's a reasonable level for a REIT and right in line with the trading levels of other REITs focused on the fast-growing data center sector. Because of that, Iron Mountain still looks like a buy for those seeking income (it has a more than 3% dividend yield) and solid growth potential.