Trade-Ideas: United Rentals (URI) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified United Rentals ( URI) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified United Rentals as such a stock due to the following factors:

  • URI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $68.1 million.
  • URI has traded 1.5 million shares today.
  • URI traded in a range 209.7% of the normal price range with a price range of $3.58.
  • URI traded below its daily resistance level (quality: 26 days, meaning that the stock is crossing a resistance level set by the last 26 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on URI:

United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It offers approximately 3,300 classes of equipment for rent to customers comprising construction and industrial companies, manufacturers, utilities, municipalities, homeowners, and government entities. URI has a PE ratio of 24.7. Currently there are 6 analysts that rate United Rentals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for United Rentals has been 1.9 million shares per day over the past 30 days. United Rentals has a market cap of $5.3 billion and is part of the services sector and diversified services industry. The stock has a beta of 2.69 and a short float of 14.5% with 9.44 days to cover. Shares are up 24.8% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates United Rentals as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 21.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Trading Companies & Distributors industry. The net income increased by 259.6% when compared to the same quarter one year prior, rising from -$52.00 million to $83.00 million.
  • Net operating cash flow has significantly increased by 432.95% to $469.00 million when compared to the same quarter last year. In addition, UNITED RENTALS INC has also vastly surpassed the industry average cash flow growth rate of 73.32%.
  • The gross profit margin for UNITED RENTALS INC is rather high; currently it is at 57.21%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.88% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Trading Companies & Distributors industry and the overall market on the basis of return on equity, UNITED RENTALS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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