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Profitable Growth & Business Outlook for CAI International Inc. (CAP)

Have you tried adventure investing? You can troll depressed sectors and industries in order to find top stocks. It is as exciting as river-rafting or trekking in Mexico. The cash inflow makes for a welcome bonus. Take the Rental & Leasing Industry, for instance. It is common knowledge that this part of the economy is in trouble. Rental & Leasing Industry stocks have declined by more than 16% during the first half of 2008.

Here is a small-capital gem stock from San Francisco, CA. The June 2008 stock price has steadily approached the 52-week high. The Price to Equity Ratio is well below 15. The Operating Margin has exceeded 60% on a Trailing Twelve Months basis. Fewer than 100 employees generate revenues of over $60 million a year. The Return on Average Equity over the last four quarters has been 25.70%. What secrets does the management team have?

The business model drives this stock. The company makes shipping containers. California is exactly the right place to send grain and minerals to hungry China. There is virtually no upper limit to demand in sight. The dollar-RMB equation implies that the United States will need shipping containers on its Pacific seaboard for some time to come. It only gets better. Escalating fuel costs mean that it no longer pays for customers to return containers. Increasing proportions of this company’s products stay abroad.

The management has built additional strengths into its operations. It has amassed a significant container capacity. This gives the company high recall in the minds of shippers. Major exporters know that this company has convenient container solutions. The company offers containers on lease, which leverages the interest rate differential between the United States and most Asian countries. Clearly, this is an excellent stock to radar.

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