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Bull of the Day: General Finance (GFN)

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When you first see today’s Bull of the Day, you’re probably going to think it’s a bank or an insurance company. To be honest with you, I thought the same thing at first glance. After taking the time to dive a little deeper in the stock, I’m glad I did. This stock is a Zacks Rank #1 (Strong Buy) with a Growth Style Score of A and just yesterday reached a new 52-week high.

I’m talking about General Finance Corp . Despite what the name may hint, the company is in the business services business. General Finance Corporation, a specialty rental services company, provides portable storage, modular space, and liquid containment solutions in North America and the Asia-Pacific regions. Its portable storage products include storage containers used in classroom equipment storage, construction equipment and tool storage, disaster shelters, landscaping sheds, recreational equipment storage, and retail inventory storage applications; and freight containers used in freight transportation by road and rail.

The reason for the favorable Zacks Rank is the series of positive earnings estimate revisions recently. Over the last thirty days, two analysts have increased their estimates for the current year. The bullish moves have pushed up our Zacks Consensus Estimate from 12 cents to 23 cents for the current year. Analysts are likely reacting to last quarter’s surprise where the company reported a breakeven quarter versus expectations calling for a 4-cent loss.

Last quarter, leasing revenues increased 31% year-over-year. That helped total revenue grow by 28%. That growth will slow the upcoming quarter as estimates for the current quarter are coming in at 11.93%. If you look at EPS growth, next year’s number is estimated to come in at a whopping 78% growth.

Taking a look at the chart, the stock was a huge momentum performer from November 2017 to July 2018. During that period, GFN rallied from $5 to $14. From July through August, GFN was chopping between $13 and $14, consolidating for an extended time. Since its last earnings report on September 5th, the stock is back to pushing up to new highs. The 50-day moving average provided plenty of support for the stock when it retested the level last week. The commodity channel index is a bit overbought, pushing up over 100 while the stock hits new highs.

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