Inside Rental, Leasing Services stocks

By Chip Brian | April 1, 2011 | Last updated on April 1, 2011
3 min read

Industries in the Rental and Leasing Services sector include companies that provide a wide array of tangible goods, such as automobiles, computers, consumer goods, and industrial machinery and equipment to customers in return for a periodic rental or lease payment.

Within this industry, there are two main types of companies: those engaged in leasing machinery and equipment often used for business operations, and those engaged in renting consumer goods and equipment. There have been excellent returns in both subsectors of Rental and Leasing Services.

There are numerous financial and tax motivations behind leasing. Leasing companies benefit in several ways: compared to lessees, they’re often able to acquire equipment in bulk at considerably lower cost, liquidate it efficiently and obtain preferred financing terms. Leasing companies are also better positioned to take advantage of tax laws such as depreciation allowances and investment tax credits.

Companies that lease equipment avoid the risk of investing in an office machine, for example, that might soon become technologically obsolete. Or they might need the equipment for only a short time. The company is usually able to deduct its lease payments from its taxable income, rather than having to deduct depreciation.

On the consumer side, people may only need certain items temporarily (e.g., car rental). People may also lease goods if they can’t afford to obtain credit or buy the items.

We have identified the Rental and Leasing Services industry group as in an Uptrend, and SmarTrend has seen significant returns from stocks in this sector.

SmarTrend has identified some exceptional results in the commercial and B2B subsector. RRR (RSC Holdings Inc.) and its wholly owned subsidiaries are engaged in the rental of construction and industrial equipment, geographically spread throughout the U.S. and Canada. SmarTrend issued an Uptrend alert for these shares on September 10, 2010 at $7.13. RRR closed at the end of March at $14.18, an increase of 98.8% since the date the Uptrend was issued.

Textainer Group Holdings Ltd, a holding company that operates as a lessor of intermodal containers, is in an Uptrend called by SmarTrend on November 3, 2010 at $27.32. With a closing price of $34.72 at the end of March, this stock has increased 27% since the Uptrend Alert was issued.

SmarTrend has also identified some significant returns in the consumer rental subsector, which is also currently in an Uptrend. The companies in this subsector are better known to consumers, such as CAR (Avis Budget Group), which closed at the end of March at $18.20. SmarTrend identified the Uptrend for CAR on September 13, 2010 at $10.72, and the return to date has been 69.7%.

DTG (Dollar Thrifty Automotive Group, Inc.) operates in the U.S. and Canada and, through its Dollar and Thrifty brands, mainly rents vehicles to business and leisure customers through company-owned stores. DTG recently closed at $64.69, an increase of 30.9% since SmarTrend identified its Uptrend on February 2, 2011 at $49.41.

Remember, you can only own your profits if you eliminate riding the emotional rollercoaster often associated with investing. Research your investments thoroughly, and/or use a trusted trading system so you base your buy and sell decisions on reliable data.

  • CHIP BRIAN is CEO and Founder of SmarTrend, SmarTrend Alert, and Trade The Trend are registered trademarks of Comtex News Network, Inc.

    Chip Brian