On Tuesday, Public Storage Inc. (NYSE/PSA), a real estate investment trust that owns self-storage centers, reported that it had acquired rival Shurgard Storage Centers Inc. (NYSE/SHU) in a deal valued at around $3.2 million. You may have been surprise to see that Public Storage paid a 39% premium for the shares of Shurgard Storage, but it suggests the attraction of this business.

 The reality is the demand for storage solutions is strong. That is why Public Storage was willing to pay so much. The deal gets rid of a major rival and makes Public Storage the market leader. But as an investment, you really have to question the valuation of Public Storage. The stock trades at 18.35x its estimated FY07 EPS and has a high PEG of 2.51. The stock also trades at hefty 9.45x sales. In my opinion, the valuation metrics are excessive and not deserving.

 Now, if you want to look at an interesting small-cap storage solution play, take a look at Tempe, Arizona-based Mobile Mini Inc. (NASDAQ/MINI, market-cap: $847 Million; web site: www.mobilemini.com; Index membership: S&P 600 Small-Cap, Russell 2000, Russell 3000).

 I first initiated coverage on MINI in November 2002 when the stock was trading at $11.51. The provider of portable storage solutions is now up 384% since my initial recommendation.

 The stock has good fundamentals. The business may seem boring, but the company has reported strong earnings consistently. MINI has beaten earnings estimates in each of its last eight straight quarters. In the 2005Q4, year-over-year revenue growth was 22.7% to a record $57.9 million, while year-over-year earnings growth was 38.8% to a record $9.8 million or $0.63 diluted share, $0.04 above estimates. The year-over-year EBITDA growth was 24.3% to $25.1 million.

 On a valuation basis, the shares of MINI look reasonably priced, but close to fair value based on the current and expected metrics. The PEG is edging higher and is currently 1.15 and the shares trade at 20.81x its estimated FY07 EPS. The PEG is well below the 2.51 belonging to Public Storage. MINI also trades at a more attractive 4.08x sales compared to Public Storage. MINI is an interesting stock but the near-term potential may be limited given the price appreciation.

 MINI announced it would initiate a two-for-one stock split, payable on March 10, 2006 to shareholders of record as of the close of business on March 6, 2006. The goal is to increase liquidity and ownership.

 The problem with a stock like MINI is any bad news could send the sellers to the exits and the stock would dump. If you own the stock, you need to be cognizant of this.

 In the meantime, keep MINI on your radar.