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

United Rentals (URI), an equipment rental leader, presents a compelling investment opportunity ahead of its Q2 earnings release on July 23, despite a recent 13% dip from November highs. The company has historically crushed the S&P 500, benefiting from an ongoing investment super cycle in infrastructure and manufacturing. While revenue and earnings growth are projected to moderate post-2024, URI offers value at 17.6x forward earnings, a Zacks Rank #2 (Buy), and recently announced a $1.5 billion share repurchase program, positioning it for potential breakout in a bullish market environment.

Analysis

United Rentals (URI) is presented as a compelling investment case, capitalizing on a confluence of positive factors including a strategic market position, attractive valuation, and supportive macroeconomic trends. The equipment rental giant has demonstrated significant historical outperformance, with its stock soaring 1,100% over the past decade, quintupling the S&P 500's return, and rising 73% in recent years versus the benchmark's 40%. This performance is driven by its exposure to a secular investment supercycle in energy infrastructure, manufacturing reshoring, and high-growth areas like AI data centers. Despite this track record, the stock is currently trading 13% below its November highs, creating a potential entry point. Its valuation appears favorable at 17.6x forward earnings, representing a 22% discount to the S&P 500 and a 6% discount to its sector. While growth is projected to moderate from its recent average of 16% revenue and 36% earnings expansion to 4-5% sales growth and 1-10% earnings growth in the coming years, upward EPS revisions have earned it a Zacks Rank #2 (Buy). This positive outlook is further reinforced by a new $1.5 billion share repurchase program and a dividend, signaling confidence from management ahead of its Q2 earnings release on July 23.

Key Decisions for Investors

• Investors could view the current 13% pullback from recent highs as a strategic opportunity to initiate or add to positions in a market leader ahead of its Q2 earnings report.
• The combination of a favorable valuation at 17.6x forward earnings, a new $1.5 billion buyback program, and exposure to secular growth trends makes URI a candidate for portfolios seeking value and diversification away from technology.
• Monitor the upcoming earnings call on July 23 for management's commentary on current business trends and forward guidance, which could serve as a significant near-term catalyst for the stock.
• Given the stock has retraced to its 21-day moving average, technically-oriented investors should watch for potential support at the 50-day or 200-day moving averages, which may offer more attractive entry points.