United Rentals: The Industrial Stock Workhorse I'd Happily Hold Through Any Market Crash

In an environment filled with artificial intelligence (AI) enthusiasm and palpable fear of missing out (FOMO), it pays to remember that some of the most basic business models can reward investors, too.

Look at United Rentals (NYSE: URI). Over the past decade, this industrial stock returned 1,360%, beating the S&P 500 by a margin of better than 5-to-1. During that period, United Rentals trounced the broader industrial sector by more than 6x -- all while operating in a decidedly prosaic industry.

United Rentals is an equipment leasing juggernaut. Image source: Getty Images.

Need a forklift for a warehouse or a boom lift for a jobsite? Call United Rentals. The company also leases higher-end equipment manufactured by Caterpillar and Deere. It's a business model that makes a lot of sense. The gear produced by Caterpillar, Deere, and others is pricey, and there are times when farmers, factories, and supervisors need equipment for only a few days or weeks, making it uneconomical to buy bulldozers and forklifts outright.

A growth stock in disguise

Perhaps the following numbers aren't what investors are accustomed to in high-flying semiconductor stocks, but 10-year compound annual growth rates (CAGRs) of 10% on the top line and 20% for earnings per share (EPS) have a growth-stock feel. Those percentages belong to United Rentals.

Speaking of growth-stock vibes, United Rentals has AI inroads. All that data center construction and the money utilities are spending to meet soaring power demand require the very equipment that United Rentals leases. Those are among the reasons revenue for the company's utilities segment more than doubled over the past decade.

United Rentals has the scale needed to meet the demands of data center and utilities customers. Over its nearly three decades in business, United Rentals executed hundreds of acquisitions, elevating its share of the North American equipment rental market to 16%. Market share leadership is data for investors. Customers want accessibility. With 1,360 locations in the U.S. and Canada, United Rentals answers that call.

All of that sounds good, and it is, but United Rentals isn't a risk-free bet. There are some concerns that the stock is stretched on valuation and that the company is potentially vulnerable to losing some hyper-local business to technologically nimble rivals. Valid concerns to be sure, but it's worth noting that in the first quarter, United Rentals posted an 18% gain in ancillary and recent revenue. That's industry-speak for fostering a devoted customer base.

United Rentals' balance sheet is in decent shape

Let's not sugarcoat it: United Rentals operates in a cost-intensive arena, so there's going to be some debt on the balance sheet. To its credit, the company is targeting a net debt/earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 1.5 to 2.5, down from a prior range of 2 to 3.

Additionally, large-scale consolidation opportunities are limited, indicating that if United Rentals goes hunting for deals, they'll be on the smaller side.

Shareholder rewards are also part of the United Rentals story. In January, the company announced a new $5 billion share repurchase program, with plans to buy back $1.5 billion in stock this year. That was accompanied by a 10% dividend hike. Those are signs that United Rentals is the type of stock that can help investors endure topsy-turvy markets.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.