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Bull of the Day: CAI International (CAI)

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Even though the market has been flirting with record territory recently, it’s bene tough to find trends. This last earnings season would put stocks en vogue for a week or two then they would fall back to pre-breakout levels. For trend-following and momentum strategies, that’s made for some tough times. However, through all the choppiness, today’s Bull of the Day has continued to deliver lots of strength.

CAI International is a Zacks Rank #1 (Strong Buy) in the transportation equipment and leasing industry which ranks in the Top 38% of our Zacks Industry Rank. CAI International, Inc. operates as transportation finance and logistics company in the United States and internationally. The company operates through three segments: Container Leasing, Rail Leasing, and Logistics. It leases, re-leases, and disposes equipment; and contracts for the repair, repositioning, and storage of equipment.

A big reason for the favorable Zacks Rank is the recent adjustment several analysts have made to their EPS estimates for CAI International. Three analysts have come out and increased their estimates for the current quarter, next quarter, the current year and next year. The bullish revisions have pushed up the current year consensus from $1.78 to $2.33 and next year’s number up from $2.14 all the way to $3.15.

There’s been a big jump in earnings recently, not just because of high utilization of its container fleet, but also because of newly acquired containers which are fully leased out. The company has recently purchased over $152 million worth of new containers. In addition to this huge chunk, they have plans for another $227 million. A growing fleet with high utilization means their EPS could continue to grow for the next several years.

Taking a look at the stock chart, you can see that shares of CAI have been locked in a very substantial bullish trend for most of the last year. For a brief period from mid-March to mid-April, CAI came down to test the 50-day moving average where it found a bid. Since pushing past that average in mid-April with shares near $16 the stock has not traded below it. The positive slope of the 50-day implies the bullish trend is likely to continue over the short-term.

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