United Rentals is Tuesday's IBD Stock Of The Day. The leading equipment rental stock shows investors two potential entry points on the chart. URI rebounded off September lows and is up 28% for the current quarter.
United Rentals is the world's largest equipment rental company, with over 1,300 locations in 49 U.S. states and throughout Canada. They also have locations in Europe, Australia and New Zealand.
The company offers rental of 4,300 classes of equipment to construction and industrial customers, utility providers, municipalities and homeowners, as well as used equipment purchase options.
URI specializes in renting heavy equipment including lifts, excavators, generators, backhoes and air compressors. They also offer service and maintenance agreements and rental protection plans.
United Rentals holds the No. 1 spot in the Commercial Services-Leasing group. The group is ranked 20th out of the 197 IBD industry groups and picking up steam. It has moved up from 41st just four weeks ago and a low 121st three months ago.
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United Rentals Earnings Beefing Up
United Rentals reported Q3 adjusted earnings per share of $9.27, up 41% vs a year earlier. Quarterly sales grew by 18%, slightly less than the 21% to 23% range in the prior three quarters.
Management raised the low end of its full-year 2022 revenue guidance and raised its adjusted EBITDA in the Oct. 26 earnings release.
Analysts are projecting annual EPS of $32.61 in 2022, a 48% increase. Another 12% growth is expected in 2023.
URI has a 31% return on equity, a measure of profitability and how well a company uses its assets. This exceeds the desired minimum of 17% ROE in the CAN SLIM investing strategy.
Equipment Stock Strong In The Fourth Quarter
United Rentals stock rose 0.5% to 347.29 in Tuesday's market trading. Shares have been consolidating for the past few weeks. But that follows a strong run-up in the first half of the fourth quarter, helped by strong third-quarter earnings released in late October.
URI stock gapped up on Nov. 10 in heavy volume, on positive inflation news and jobless claims numbers, and an announcement it will partner with Shell for their all-electric trucks. United Rentals will provide EV trucks to Shell's Geismar, La., chemical manufacturing site as part of a pilot program.
Shares are in a yearlong deep, consolidating formation with a 368.04 handle buy point. Breaking the downtrend of the handle could offer an early entry, with a move above Friday's high of 358.56 providing a specific trigger.
URI stock rose above the 200-day moving average following the Q3 earnings report. URI has found support at its 21-day exponential moving average.
Shares are up a whopping 28% in the fourth quarter-to-date. Shares are about 6% off 52-week highs. The stock has an 89 Relative Strength Rating, meaning it has outperformed 89% of the stocks in the IBD database in the last 12 months, showing its dominance.
Heavy Equipment Stocks Pull Their Weight
Heavy equipment manufacturers such as Caterpillar, Deere, Terex and Titan Machinery have also proved strong in the fourth quarter. CAT is up over 41% and DE is up over 30% this quarter, while TEX is up over 50% and TITN is up 48%.
The overall industry sees strong demand and higher prices as a headwind for stock prices, with potential higher infrastructure spending.
