Industrials

Report by Thompson Research Group

TRG’s latest report looks to address the following 3 questions: 1) Is non-res construction going to cycle down? 2) Is HRI over-earning, given the meaningful growth since 2019? 3) Should the group reduce leverage and internal investment to generate FCF? TRG believes HRI is in the sweet spot operationally and for investors, as they are a top-3 player with scale advantages, but relatively small at 4% market share. This allows the company to make bolt-on acquisitions that, at this size, move the needle yet carry minimal operating and financial risk. The stock is up meaningfully on a 3-yr and 5-yr basis but is early in its maturation process. HRI remains a top pick for TRG heading into 2024.

Report by Thompson Research Group

2H22 and 2023 will be a strong period for non-res construction and maintenance spending activity - backlogs / pipelines are sizable and increasing at a solid rate (and comes before the infrastructure bill which has yet to hit the ground in a material way). In keeping with trends over the past 18 months, data centres, warehouses and healthcare are very strong. Although labour and material challenges remain, TRG expects bullish results from several stocks including WillScot Mobile Mini, Herc, Vulcan Materials and Beacon Roofing.

Industrials

Report by Thompson Research Group

Thesis turbocharged - credible case for this being a $300 stock (~75% upside) in the next 2+ years. TRG discuss the key takeaways from HRI's recent investor day. N.America’s third largest equipment rental company is shifting into a higher growth mode through investing organically (fleet, greenfield openings) and M&A, with ongoing margin expansion moving them towards peers in the high-40% range. This should be supplemented by capital returns to shareholders. Investors to be handsomely rewarded as the "big get bigger".

Report by 280First

Text discussions within financial filings contain material information. By utilising AI, NLP, data analytics and qualitative analyst oversight, 280first can glean material and actionable insights on companies which will be missed by most institutional investors. Recent highlights include:

Fastenal (FAST) - Customer retention concerns.
FedEx (FDX) - Likely to face an even more competitive environment.
Herc Holdings (HRI) - Ready to initiate dividends?
Patterson Companies (PDCO) - Changing supplier relationships and margin impact.

Industrials

Report by Thompson Research Group

No let up in demand, undersupply to last well into 2022 - the situation appears even more acute and prolonged than TRG had originally anticipated. One of their equipment rental contacts provided a clear view of the current situation - “there’s not a rental company in our region that has enough equipment”. This early read leads TRG to expect strong Q2 results and raised FY21 guidance/outlook from United Rentals, Herc Holdings, H&E Equipment Services and WillScot Mobile Mini Holdings.