CAI International (CAP): Share price cycling in bullish 'flag'

Posted Mar 14th 2008 10:23AM by Larry Schutts
Filed under: Earnings Reports, Technical Analysis, Stocks to Buy

CAI International (NYSE: CAP) is a leading manager and lessor of intermodal freight containers. The company operates a worldwide fleet of 754,000 twenty-foot equivalent unit containers, through ten offices in the US, Europe and Asia. It offers term and finance (rent-purchase) leases and contracts to repair, reposition and store containers. CAI focuses on managing units owned by container investors.

The company pleased investors last week, when it reported Q4 EPS of 36 cents and revenues of $18.9 million. Analysts had been looking for 31 cents and $18.2 million. Management also guided FY08 EPS to $1.30-$1.35, versus $1.27 consensus. The CEO noted that there had been no decline in demand resulting from the U.S. economic slowdown. Trading lanes to Europe and within Asia were said to have remained strong.

CAP shares popped through 90-day moving average resistance on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with one "strong buy", two "buys" and one "hold". Analysts expect a 24% growth rate, through the next year. The CAP P/E ratio (16.46), Price to Book ratio (1.56), Operating Margin (62.61%) and Net Profit Margin (29.65%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 34% of the outstanding shares. Over the past 52 weeks, the stock has traded between $7.90 and $15.96. A stop-loss of $10.40 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.

Tags: CAI International, CaiInternational, CAP, flag, fundamental analysis, FundamentalAnalysis, momentum, technical analysis, TechnicalAnalysis