Robert W. Baird & Co Analyst Benjamin Hartford says Ryder System, Inc. (R) is one of his top stock picks. He says that he believes the company’s market will consolidate, that the barriers to entry are rising, and that the complexities associated with operating fleets are greater than they’ve ever been. He says those factors create a bias toward outsourcing to specialists that can help solve problems.
“What had been done in-house by shippers — the acts of managing fleet and managing broader transportation flows — is noncore,” Hartford says. “They likely require help more than they’ve ever needed it, which creates new growth opportunities for a model like Ryder.”
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Hartford says Ryder is a leasing company at its core, but that it is increasingly becoming an outsourcing company.
“It’s a company that offers leasing services to these private fleets but also offers customers full outsourced dedicated fleet functions, on-demand maintenances, and other related and complementary services,” he says. “And with that growth, we expect to see both organic revenue growth and improved return on invested capital characteristics for the model.”
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