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Bull of the Day: CAI International (CAI)

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This morning I stumbled across some very good news for a stock we are currently holding in Momentum Trader. Well ahead of its earnings report, not due out until mid-August, CAI International (CAI - Free Report) gave updated guidance for the upcoming quarter. Not only is it supposed to be good, but it’s absolutely fantastic. A game-changing report that could shoot this stock through the stratosphere. That’s why I’m naming it today’s Bull of the Day.

For those of you that don’t know CAI, CAI International is a global transportation and logistics company specializing in intermodal leasing, rail leasing and operations, and global logistics services. As of the last quarterly update, CAI owned more than 933,000 twenty-foot equivalent unit containers (TEUs). On top of its owned TEU fleet, CAI also manages additional containers totaling about 155,000 units for a total container fleet of about 1.09 million.

Last quarter, CAI’s net income was $5.3 million last quarter. The company estimates that Q2 net income will come in between $10.7 and $11.3 million or between 55 and 58 cents per share. That’s right folks, CAI is set to double its net income quarter-over-quarter. Their current utilization of their fleet is up at 97.7% and the company estimates this number will remain above 98% throughout Q3. Nearly all their containers are expected to be delivered in Q2 and Q3, with all under leases with an average term over 8 years.

Year-to-date CAI has already invested $370 million in new containers, with $105 million worth expected to be delivered in Q2 and $202 million delivered in Q3. With utilization so high and new containers already leased out, CAI also reached out to lenders to increase their loan commitment from $775 million to $960 million. This should help fuel a rally for several quarters to come.

Even before this recent news broke CAI was a Zacks Rank #1 (Strong Buy). A big reason for the favorable rank was three analysts increasing their EPS estimates for the current quarter and current year. The bullish sentiment pushed up our Zacks Consensus Estimate for the current quarter from 29 cents to 43 cents and increased the current year number from $1.19 all the way to $1.87.

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