Ryder System, Inc. (R) — If you have moved more than once, there’s a good chance you’ve used Ryder. But leasing small trucks is only part of its business. Ryder also provides transportation services and equipment to large and mid-size companies through longer-term leasing.
The Federal Reserve’s relatively optimistic assessment that the economy is meeting growth expectations should make for a positive operating environment. And Ryder’s organizational scale enables it to serve customers’ global, regional and local needs. Further, its regional orientation allows it to compete effectively with truckload and smaller carriers, as well as railroads and air-cargo companies, by offering leasing that includes follow-up maintenance and servicing.
On Monday, S&P Capital IQ reiterated its “buy” rating on the shares and raised its earnings estimates. Its analysts now expect EPS of $5.58 for 2014, up from a previous estimate of $5.55, and $6.51 for 2015, up from $6.33. Ryder reported EPS of $4.63 in 2013. Capital IQ maintained its 12-month price target of $109.
The bull market trendline in R stock started at $33 in July 2012. Shares consistently held that line and recovered from penetrations of the 200-day moving average twice this year.
In October, they tested the line, forming a bullish “V” with an apex at $77, before staging a strong rally to just under the 50-day moving average at $89. The reversal at $77 was accompanied by a high-volume selling climax that should result in a successful test of the double-top at $93 to $94 and a run to over $115.
Investors would be wise to take a position in R stock. Along with its 1.7% dividend yield, it could provide long-term, double-digit returns.
