NEW DIRECTIONAL CALL PLAYS
United Rentals, Inc. - URI - close: 105.58 change: +1.87
Stop Loss: 101.80
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
URI is the 800 pound gorilla in the rental space. With almost $5 billion in annual sales they have become the largest equipment rental company in the world. URI offers 3,100 categories of construction and industrial equipment for rent, including a number of specialty equipment. They have over 870 locations in 49 U.S. states and 10 Canadian provinces.
URI claims a diverse customer base that includes construction and industrial companies, utilities, local municipalities, government agencies and independent contractors.
Business must be good because URI is developing a trend of beating analysts' estimates. Their most recent earnings report in April was 90 cents a share on revenues of $1.18 billion. Wall Street was only looking for 76 cents a share on revenues of $1.17 billion. Management reaffirmed their full year outlook.
Last year URI delivered earnings growth of 30 percent. They're on track to hit almost 32% EPS growth this year.
If you believe the economy is improving then URI should continue to benefit as construction picks up. The relatively slow growth the U.S. has seen so far has promoted a more cautious stance on companies in the construction and industrial space. That means more of them have chosen to just rent equipment instead of buying it. This has fueled strong time utilization rates for URI.
URI reported they spent $43 million of their $500 million stock buyback program in the first quarter. They expect to complete the program by April 2015.
Technically shares of URI are in a long-term up trend as investors continue to buy the dips.
Tonight we are suggesting a trigger to open bullish positions at $106.70.
We are not setting an exit target tonight but the point and figure chart is bullish with a $114.00 target.
Trigger @ $106.70
- Suggested Positions -
Buy the Sep $110 call (URI140920C110) current ask $4.40
Option Format: symbol-year-month-day-call-strike
Entry on June -- at $---.--
Average Daily Volume = 1.6 million
Listed on June 25, 2014