Best Stocks to Buy on the Dip: URI Stands Out Before Earnings

Amidst a bullish market driven by strong Q2 earnings and expectations of Fed rate cuts, United Rentals (URI), an equipment rental leader, is highlighted as a potential value and growth opportunity. Despite its significant historical outperformance, URI currently trades at a discount to its sector and the S&P 500 on forward earnings (17.6X), presenting a compelling entry point. The company, which reports Q2 earnings on July 23rd, benefits from ongoing infrastructure and industrial investment cycles and recently announced a $1.5 billion share repurchase program, supporting its Zacks Rank #2 (Buy) rating driven by upward EPS revisions.

Analysis

Against a backdrop of record highs for the S&P 500 and Nasdaq, fueled by better-than-expected Q2 earnings and anticipated Federal Reserve rate cuts, United Rentals (URI) is presented as a compelling investment case. The equipment rental firm, a significant outperformer over the last decade with a 1,100% gain, currently trades at a notable valuation discount. At 17.6X forward earnings, URI is priced 22% below the S&P 500 and 6% below the construction sector average, while also sitting 13% below its November highs. This valuation emerges despite strong fundamental drivers, including its role in the investment super cycle across energy infrastructure, manufacturing reshoring, and high-growth sectors like AI data centers and renewable energy. While revenue growth is projected to moderate to 4-5% in 2025-2026 from its recent 16% four-year average, upward earnings per share (EPS) revisions have earned it a Zacks Rank #2 (Buy). The investment thesis is further supported by a new $1.5 billion share repurchase program and a dividend, signaling confidence in capital returns. The stock's recent pullback to its 21-day moving average ahead of its July 23rd earnings report is identified as a potential technical entry point.

Key Decisions for Investors

• Given URI's valuation discount relative to the broader market and its sector, coupled with strong secular growth drivers and a new $1.5 billion buyback program, investors could consider the current pullback as a strategic entry point for a long-term position.
• The upcoming Q2 earnings release on July 23rd is a critical catalyst; pay close attention to management's commentary on business trends and forward guidance to confirm the bullish outlook.
• Monitor key technical levels, such as the 50-day and 200-day moving averages, as the article suggests these could present solid buying opportunities for long-term investors if the stock experiences further dips.
• Investors should weigh the projected slowdown in revenue and earnings growth against the company's strong historical performance and its strategic positioning in long-term infrastructure and technology-related projects.