Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

AMERCO (UHAL), Penske Automotive Group, Inc. (PAG): This Company Is Still Cheap Despite the Recent Run-Up

Page 1 of 2

Companies that are the best in their industry deserve a premium valuation, but investors in AMERCO (NASDAQ:UHAL) do not have to pay up at its current market price. AMERCO (NASDAQ:UHAL)’s main business, AMERCO (NASDAQ:UHAL), is the largest of its kind in North America. In a business where scale is as important as brand, AMERCO (NASDAQ:UHAL)’s leadership on both qualities makes it a valuable asset for shareholders.

Best in the business

AMERCO (NASDAQ:UHAL)’s fleet of trucks and trailers is the largest in the nation; its extensive dealer network puts those of Penske Automotive Group, Inc. (NYSE:PAG) and Avis Budget Group Inc. (NASDAQ:CAR) to shame. The enormous scale of AMERCO (NASDAQ:UHAL)’s operations relative to its competitors enables the company to grab market share through price reductions.

Penske Automotive Group, Inc. (NYSE:PAG)

As a result of using its scale to scoop up additional market share, U-Haul has achieved a 50% share of the market in North America, compared to only 20% for Avis Budget Group Inc. (NASDAQ:CAR) and Penske Automotive Group, Inc. (NYSE:PAG) — combined.

But what is really impressive about U-Haul is how it got to be so dominant. Back in the 1980s, Ryder (now a subsidiary of Avis Budget Group Inc. (NASDAQ:CAR)) was a formidable competitor. In fact, competition from Ryder was so fierce that AMERCO started investing in completely separate businesses as a way to diversify away from the crumbling do-it-yourself equipment rental business.

Luckily, current Chief Executive Officer Joe Shoen wrestled the company away from his father and deftly navigated the company through a series of acquisitions and changes in strategy that enabled the company to stymie Ryder’s attack. U-Haul has been extremely sensitive to market share grabs by competitors ever since, which has encouraged its two closest competitors to back out of the market.

For instance, Ryder accounts for only 6% of Avis Budget Group Inc. (NASDAQ:CAR)’s total revenue and does not receive management’s full attention. Avis Budget Group Inc. (NASDAQ:CAR)’s golden goose is its car rental business, which receives most of the capital expenditure allocation. For example, the company announced its acquisition of Zipcar, which fits in better with the car rental business than the do-it-yourself equipment rental business.

As a result of Ryder’s lowly status within the firm, Avis Budget Group Inc. (NASDAQ:CAR)’s management announced its intention to wind the business down over the next several years. Given U-Haul’s penchant for grabbing market share, it seems likely that the market leader stands to benefit most from Ryder’s demise.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!