Last up is mid-cap transport and freight operator Ryder System (R). Ryder leases, rents, and services commercial trucks ranging from vans to tractor-trailers. As firms look to keep transport costs in check, Ryder offers an attractive solution: rather than own the equipment themselves, customers can lease trucks from Ryder and avoid maintenance issues, or use shorter-term rentals to immediately increase capacity without letting excess trucks sit idle in a parking lot.
Ryder has done a good job of growing both revenues and margins in the last several years. The firm has posted 24% sales growth since 2010 alone, the combined result of more green sprouts in the economy and a more effective sales pitch. Today, as firms remain cautious about parting with big cash outlays, a larger chunk of operations come from dedicated carriage contracts, which provided longer-term solutions to customers in exchange for much more stable, consistent revenues.
Ryder's business is capital intense, but the firm has managed to maintain a minimally leveraged balance sheet. Given the rising relative strength of the transports sector in the last several months, Ryder provides a good way to get exposure without nearly as much cyclical downside (or commodity exposure) as a typical transport name. This Rocket Stock reports earnings on April 23.
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-- Written by Jonas Elmerraji in Baltimore.