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Anatomy of Success: CAI International (CAI)

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When a company has earned the coveted Zacks Rank #1 (Strong Buy) they have a high probability of outperforming the market over the next 1 to 3 months.  And if you are just getting started, this is a great way to help you identify the best companies in which to invest.  

The ranking system finds companies both big and small that have the right characteristics to produce superior gains.  Achieving a Rank of #1 is not easy, as only 5% of companies within the Zacks Rank universe earn this position.  The example below illustrates how a company was added to the Zacks Rank #1 list, and remained on the list post a strong earnings report as it continued to see price appreciation beyond the three month period.

Example: CAI International

CAI International is a small cap intermodal freight container leasing and management company.  CAI leases primarily to international steamship companies, and are used to transport cargo by a number of means, including ship, truck and rail.

On April 22nd, CAI was added to the Zacks Rank #1 list, after it was reported that per diem rates had tripled, and that new and used box prices had firmed.  The stock price closed at $20.86, and on June 19th, management preannounced strong Q2 earnings results due to improving industry trends.  Three months after being added to the list on July 22nd CAI closed at $26.93, a +29.1% improvement since it became a Zacks Rank #1.  

CAI maintained its Zacks Rank #1 status after the strong earnings report, and as of the close yesterday (at $29.10) it was up another +10.4%; for a total gain of +39.5%.  During the same intervals the S&P 500 posted gains of +2.5%, and +5.6%.  

The table below shows the performance of both CAI International and the S&P 500 over the time frame from April 22nd to September 27th; the duration of CAI being on the Zacks Rank #1 list.

Overall, by following the Zack Ranking system, you can easily identify the best stocks which are positioned to beat the market on a consistent basis, and how to stay in those top stocks as they continue to see price appreciation.

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