United Rentals, Inc. (URI)

Poor fundamentals.

Strong technical chart.

Still undervalued. Waiting to capitalize on the economic recovery.

When housing and construction pick up contractors will need to rent equipment.

Construction market is coming back and more homeowners are tackling their own projects instead of hiring contractors.

This company should do well under a recovering economy with assist for infrastructure projects by the Federal government.

Shoutout to Berkowitz

This stock was grossly undervalued a month ago but has been creeping up. I bought on March 9th for $3.04 and have already made a reasonable profit. This company tends to have a boom and bust cycle which follows the construction economy. I bought this in 2002 for about $5 and sold in 2007 for about $33. It is a good company that is the leader in its field but is beat up by macro conditions. They have closed a number of under-performing stores and bought back shares so that now there are only sixty million outstanding. The economy will eventually recover and URI will be well positioned to take advantage. Sure the company isn't very profitable at this exact moment but if you are a buy and hold value investor as I am, you can make a lot riding this company up over the next five to seven years.

Estimated free cash flow of 2$ per share for 2009 according to value investor Bruce Berkowitz.

If this trun out to be true, then this stock is selling at only 2.5 times cash flow.

Who wouldn't like to be able to purchase a business at this price level?

This is a bit of a riskier call, but United Rentals may be in a position to substantially benefit from the stimulus package.
With major infrastructure work around the country being proposed, and the fact that people may not have the cash or desire to purchase equipment, the renting of large construction equipment may be the right business model.

Solid management and planning for upcoming rough years conservatively, they do have lots of debt, but their assets can be liquified fairly quickly if needed...debt not due till 2012 though.

Yes, construction is down and the infrastructure portion of the stimulus bill was pathetic, but this company has good cash flow and no debt due till 2012. They can reduce purchases of new equipment and cut costs. They are closing stores and cutting costs. They bought back some debt at a big discount and may continue to do so. At 3.50 a share, it is trading at less than last years free cash flow. 2008 was not a good year for construction and URI was able to hold up its utilization pretty well. 2009 construction will be weak, but it is not going to zero and if this economy ever turns around, these guys may be the last ones standing. Certainly it should be worth 3-5 times free cash flow in the future.

Balance sheet from last year took large losses on new equipment purchases that hurt it's earnings report. 2009 and beyond will output better numbers and the Obama stimulus package should increase demand for their rental units with new construction.

When the bosses wake up that run this company they will figure out their job is to make a return for the shareholder. You know the people that own the company but have no say in it. In the rental business the way to do that is to run a well maintained fleet with a few years on the equipment. The profit is keeping equipment in good shape past the depreciation period. Age that fleet. Using your buying power not to sell equipment cheap, but to buy it cheap and rent it. You make 10-15% selling it new and should be making 40% selling it used.

rental

I love this company. I first was tipped by my colleges construction and the equipment being used. Along with Bobcats, about every machine being used is rented through United Rentals. The stock plunged after the failed takeover, but it has continued to put up numbers in a very tough macro environment.

Very reasonable price.

It was "Tails"

United is a good company in a good business. The $34.50 buyout price that was offered by Cerberus is a reasonable target price for 2010.