Amerco (UHAL), Penske Automotive Group, Inc. (PAG) & Avis Budget Group Inc. (CAR): Buy The Best Company In The Industry

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Other businesses

In addition to U-Haul, AMERCO (NASDAQ:UHAL) owns self-storage real estate and a couple of insurance companies. The real estate is undervalued by the market, likely because it is under the umbrella of a company that owns a “real” business. If the real estate were spun off as a standalone REIT, it would fetch a much higher valuation.

One of the insurance companies, RepWest, is the insurance arm of U-Haul truck rentals. Oxford Life is a small life insurance arm that adds little to the company’s valuation.

Investment case

AMERCO (NASDAQ:UHAL) owns the preeminent DIY truck rental company in North America, as well as a large real estate portfolio. The balance sheet is flush with cash and the CEO owns a significant stake in the company. Despite all this, the stock trades at just 12 times trailing earnings.

It’s hard to go wrong buying the best company in the industry with a best-in-class CEO. Investors who buy in at 12 times earnings will likely receive a greater than 10% annualized return on their investment considering the hidden value of the real estate portfolio. Value-realizing actions, such as spinning off the real estate, could make the return even higher.

The article Buy the Best Company in the Industry originally appeared on Fool.com.

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