A Bullish Sign for the Market?

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, A Bullish Sign for the Market? The economy is showing signs of heating up lately. Just three months ago, travel companies were pessimistic about the travel industry. Not anymore. Airbnb, Booking Holdings, and Expedia reversed their gloomy outlook to issue bullish guidance over the past week. Take Airbnb as an example. It expects its key metric of nights and experiences booked to accelerate in the fourth quarter. Expedia raised its full-year gross bookings growth guidance to 5% from 4%. Booking also issued a strong outlook. A positive sign for stocks: It is just one example of why investors are feeling bullish now. Yesterday, Federal Reserve Chair Jerome Powell said the economy is strong after the central bank’s 25 basis-point interest rate cut. He wouldn’t say whether the Fed will pause during its December meeting. He pointed out that there will be two inflation data and one jobs report before its next meeting, so the Fed prefers to wait until they digest these data before committing to anything. Notably, Fed officials removed the reference to “further” inflation progress in its language after the FOMC meeting. Instead, it said inflation “has made progress toward the committee’s 2% objective but remains somewhat elevated”. In other words, it indicated that inflation might be flat at its current level. The Fed might watch inflation carefully to see if there is any uptick after several strong economic data. Officials seemed to like where the labor market and the economy stand right now. - “Powell & Co. reminded investors about the solid economic footing the US continues to stand on,” said Bret Kenwell at eToro. - “Powell would not tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. However, the Fed appears more comfortable with the labor market and the current US economic backdrop than they did a few months ago.” Bret Kenwell at eToro (Photo: CoinDesk) All in all, Wall Street expects the Fed to cut rates slowly from now on. Officials have a breathing room, and there’s no need to rush. - “The balance of risks gives the Fed ample room to lower the Fed Funds rate well into 2025. Markets should not expect supersized rate cuts unless the economy turns south and doesn’t look at all likely for a while,” said Jamie Cox, managing partner for Harris Financial Group. Tony Roth at Wilmington Trust believes the market has another six months to rally. Yes, there are risks. Valuations are lofty. Some investors are skeptical of the second Trump administration’s plans to cut taxes and impose higher tariffs because these moves may lead to higher inflation. It remains too early, though. Until Trump’s economic plans become clear, the market may be volatile but could be moving higher, said Roth. - “At some point, given the stretched multiples on equities and the higher income levels of bonds, we could very much have a very compressed equity risk premium and little opportunity left in the equity market. We’re not there yet. I think that we’ve got six months before we have to have a serious conversation about being there,” said Tony Roth, CIO at Wilmington Trust. This “Surprising” Business Produces Fantastic Growth And Cash Flow Today’s Long-Term Pick: United Rentals, Inc. (URI) When I say “construction equipment”, the first thing you think is “cyclical.” I bet a whole bunch of assumptions pop into your head, like low growth, low margin, finite market size. Well, United Rental challenges everything you might assume about a construction equipment rental company. Yes, the business is still capital intensive. But check out this growth: (Source: United Rentals) With 1,666 locations, United Rentals is the largest construction and industrial equipment company in North America by market share. First, the business is far more diverse than your neighborhood U-Haul. United Rentals counts at least 16 different industries within its customer base. The diverse customer base softens the effects of the economic cycle. (Source: United Rentals) Is growth capped though? Hardly. Overall, the industrial and construction equipment industry grew from $15.5 billion in 1997 to ~$55 billion in 2022. Moreover, the rental market has grown about 50% faster than the overall market. (Source: United Rentals) United Rentals even found its next S-curve to drive growth: specialty equipment rentals. (Source: Martin Hacks) The specialty equipment segment drove more than $4 billion in revenue for United Rentals the past two years. This new line of business now makes up more than 28% of all sales. It includes: - Trench safety: excavation support, confined space entry, and customer training for utility installs, manhole work, and other underground applications - Mobile power & HVAC solutions for disaster response, plant shutdowns, commercial renovations, and seasonal climate control - Fluid solutions for municipalities, mining, industrial plants, construction, and agri-business customers - Tool trailers with specialty hoiting, torqueing, pipe fitting, and air tools for refineries, industrial shutdowns, and large sites - Port-a-potties and luxury mobile restrooms for special events, construction sites, and industrial projects - Portable storage, mobile offices, and modular space solutions (containers) for all kinds of industrial and construction sites, commercial applications, and a wide range of other markets (Source: United Rentals) United Rentals has a fantastic moat of capital intensity. If you wanted to compete with them, you’d have to buy a billion dollars worth of equipment. Even then, URI has the scale to offer deals through their new apps for all the kinds of equipment clients of all sizes could possibly need. As a result, United Rentals is a cash generating machine. Between its core business and its new specialty division, the company generated a 14.1% Free Cash Flow margin. (Source: United Rentals) Of course, management did the responsible thing and used the increased cash to pay down debt. Which further improves net margins. (Source: United Rentals) Bottom Line: United Rentals offers consistent growth, high margins, and a moat. Specialty equipment adds a key growth driver on top of the largest industrial and construction rental business in North America. The company already possesses incredible scale in terms of all the equipment it can offer to customers. Soon, a company that’s already growing should benefit from the tailwind of the growing economy.   [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](     © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](