Bullish on UHAL Up to $80

AMERCO, Inc. (UHAL - Analyst Report) is the parent company of U-HAUL International, the largest consumer truck rental company in the world. It is also the second largest self-storage company in N. America. Unprecedented number of calamities led to marketing opportunities. Truck rental seems to be picking up earlier this year. In April alone there have been six disasters, three fires, two tornados and a major storm. U-Haul (as it usually does) has offered 30 days of free storage to the victims of these events.

Seldom in any given area are storage facilities at 100% occupancy so giving free storage does not cause an opportunity cost. Since a number of victims are likely to keep the storage longer than 30 days the net result is a higher paid occupancy. Our local survey of company owned facilities suggest that truck rental transactions are higher than normal (at least in San Diego and Orange counties in California). There seem to be more trucks on the road than we normally see at this time of year.

The stock has usually been valued on EBITDAL (EBITDA plus lease expense) per share, selling between two and three times EBITDAL. Based on our estimates for fiscal 2009 EBITDAL of $27 a share we would expect a price range of $54 to $81, with a potential move to the $90 level as earnings growth resumes. We rate the stock a Buy and our price target remains at $80 a share.

Read the full analyst report on UHAL.

Read the full analyst report on UHAL