Conclusion, Investment Implications, Strategy

United Rentals, Inc. (URI) appears to be resuming its June 2020 major uptrend amid coincident quarterly relative outperformance versus the benchmark S&P 500 (SPX).  A sustained rise above the $316.14 area would help confirm this and would target an additional 15% rise to $385.00per share.  This is an Asbury Momentum trade idea.

Analysis and Rationale

United Rentals, Inc. (URI), through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power and Fluid Solutions. The company also sells aerial lifts, reach forklifts, telehandlers, compressors, and generators; construction consumables, tools, small equipment, and safety supplies; and parts for equipment that is owned by its customers, as well as provides repair and maintenance services. United Rentals, Inc. sells its used equipment through its sales force, brokers, and Website, as well as at auctions and directly to manufacturers. As of January 1, 2021, the company operated a network of 1,165 rental locations, including 1,018 of these locations are in the United States, 136 are in Canada, and 11 are in Europe. United Rentals, Inc. was founded in 1997 and is headquartered in Stamford, Connecticut.

The upper panel of Chart 1 below plots URI daily since December 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies.  The lower panel displays a corresponding daily relative performance chart of URI versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).

Chart 1

The rightmost green highlights in the upper panel show that URI appears to be resuming its June 2020 major uptrend, as defined by its 200-day MA, following last week’s test of the 50-day MA.  Meanwhile, URI’s trend of Strategic relative outperformance versus SPX as shown in the lower panel also appears to be resuming.  The other green highlights show that similar tests of the Strategic relative outperformance trend on Jan 27th and Dec 28th also resulted in the resumption of the positive trends in both panels.  A sustained rise above the 50-day MA, currently situated at $316.14, would help to confirm the outright uptrend has resumed and would target an additional 15% rise to $385.00 per share. 

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $317.43 area, a long entry price of $334.00 would provide a 1:3.1 risk/reward ratio (risking $1.00 to make $3.10) with an initial risk of 5.0%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.