Are you evaluating investing in URI? Consider as it managed to marginally outperform the broader market
13 Dec, 201813 min read
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UNITED RENTALS INC delivered stellar performance on Thursday. It gained +0.54% to close at 108.88. On a day when the overall market breadth was 35%, it closed higher than 7% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.
URI showed a strong down trend over the last 3 months. During this period URI lost -33.99% and saw a maximum drawdown of -40.7%. There was a short signal during this period which returned +28.72%.
URI has been underperforming the SP500 index in recent time, after having outperformed till 21 Mar, 2018. Over the last 2 years 11 months and 9 days, URI outperformed the SP500 index on 53% days.
URI returned losses on 63% days in the last three months. During this time, it delivered on average -0.61% per day. It delivered it's worst daily return of -15.04%, during this period, on Thursday, 18 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +4.08% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 15 Oct, 2018. This bearish trend lost -18.16% of investor capital.
URI had 5 profitable and 7 loss making months over the last year. During the last year, URI underperformed SP500 index on monthly return basis. URI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -26.19% compared to -7.28% returned by SP500 index in Oct 2018. URI had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.
The challenge is not to pick the best investment. The challenge is to pick the right investment.
-- Don Connelly
URI is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in URI's volatility from 27 Sep, 2018 to 24 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that URI has significant positive skewness in it's return distribution. This indicates that investors can expect URI to recover from drawdowns quickly. Which makes URI a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in URI derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than URI. Therefore, SP500 must receive a lower allocation than URI in your portfolio. SP500 index usually has shorter drawdown period than URI.
Based on your interest in URI you may find it interesting to know that UNH and AMZN are both large caps that have shown remarkable performance and deserve to be on every investors' watchlist.
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