Analysis: URI

After you receive this alert, we will buy 125 shares of United Rentals (URI) at or near $304. Following the trade, the portfolio will own 125 URI shares, roughly 1.0% of the portfolio's assets. 

After sharing both our fundamental assessment as well as our technical one for URI shares, this morning we are taking out a starter position with an 18-month price target of $420. We see modest downside to the $280 level for the shares, but given the volatile nature of the current market environment we will be building the position size out in small bites over the coming weeks. Even so, we are rating URI shares a ONE given the compelling risk-to-reward tradeoff at current levels.

As we discussed in our fundamental comments, the greatest risk we see to the position is being a tad early. However, over this past weekend, Amtrak cancelled trains between Washington, DC, and New York due to a freight train derailment near Aberdeen, MD. We see this as just the latest example of the sorry state for U.S. infrastructure, and as we've said more than a few times pain points such as that one cry out for a solution.

We expect utilization levels to move considerably higher for United Rental's equipment fleet in the coming months as we move into the spring construction season and the beginning of the Biden Infrastructure Bill begins to kick in. Given the multi-year span of the Biden plans, we are inclined to be patient with this new portfolio holding.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)