2024-03-29 04:28:57 ET
Summary
- United Rentals appears to meet the criteria of a 'wonderful' company - it's got a high ROI business model, limited scaled competition, and a strong franchise in most U.S. markets.
- However, the company's share price has expanded too quickly, in our view, potentially due to investor exuberance around the company's strong results.
- The stock is currently trading considerably above our Fair Value estimates, which poses risks for investors looking for a margin of safety.
- With additional macro risks at play, we think watchlist-ing this company and waiting for a better price appears to be the best course of action.
- We rate URI a 'Hold'.
When it comes to investing over the long term, there are two things that you need to do correctly in order to do well:
- Buy great companies
- Buy them at great prices
Ask Warren Buffett - he's got a number of famous quotes that are focused on this formula:
"Price is what you pay. Value is what you get."
"For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments."
"The three most important words in investing are margin of safety."
"It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price."
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United Rentals: Wonderful Company, Terrible Price