Investors don’t need to just invest in flashy companies that make the headlines to beat the market. Names like Nvidia and Tesla may be exciting to follow, but a quiet, industrial stock like United Rentals (URI -1.79%) can provide market-beating returns, too.
Shares of the world’s largest equipment rental company have trounced the S&P 500 index in 2024 and should have more room to run heading into 2025. Even after soundly beating the S&P 500 with a 40% total return in 2024, United Rentals looks to have tailwinds heading into 2025.
URI Total Return Level data by YCharts
The time is now for infrastructure
United Rentals is the industry leader with more than 1,600 global branch locations. It concentrates in North America with a diversified customer base including companies in the construction, industrial, energy, and mining sectors. The company also has a highly profitable specialty solutions segment that has been growing at a 24% annual rate over the past decade. That represents about one-third of annual revenue.
Shares have soared this year as United Rentals’ business continues to grow. Sales from equipment rentals, which make up 85% of total revenue, increased 7.4% in the first nine months of 2024 versus last year. Diluted earnings per share jumped nearly 12%, though. The company has rewarded shareholders by paying out 10% more in dividends, too.
United Rentals CEO Matthew Flannery believes the company is well situated looking forward as well. In the company’s third-quarter earnings release, he stated, “Longer-term, we remain optimistic on the multiple secular tailwinds we see, particularly across large projects.”
One of those tailwinds is ongoing infrastructure spending authorized by the Bipartisan Infrastructure Law signed in 2021. That law provides $550 billion through 2026 for investments in roads, bridges, water infrastructure, and other U.S. infrastructure. And it’s not just federal money that will boost projects in which United Rentals will participate. Considering all that, it’s not hard to see why the stock has soared this year.
