Daily Stock Pick: McGrath RentCorp
A portfolio of stocks I've been building since September 3, 2019, named Volio, will eventually hold 52 dividend dogs. Volio is the fifth portfolio I've built (at a one dividend dog per-week pace) since 2014. Five portfolios = V for Volio!
Today I'm reviewing the fifth of five industrials sector stocks poised to join my Volio folio this week. One could be my forty-fifth pick for Volio!
That industrials sector includes twenty-three industries all dedicated to designing, fabricating, and servicing stuff we want and use. Those industrials industries range from aerospace and defense to waste management with all the transportation, business services, and equipment required in between.
My subject today is a small-cap rental and leasing services firm named, McGrath RentCorp. Its trading ticker is MGRC. This is my first report on McGrath RentCorp for any of my portfolios.
McGrath RentCorp is a rental company. It is comprised of four reportable business segments: Modular building and portable storage segment (Mobile Modular), Electronic test equipment segment (TRS-RenTelco), Containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (Adler Tanks) and Classroom manufacturing division selling modular classrooms in California (Enviroplex).
The company generates its revenues primarily from the rental of its equipment on operating leases with sales of equipment occurring in the normal course of business.
McGrath RentCorp was founded in 1979 and is headquartered in Livermore, California.
I use three key data points to gauge dividend equities or funds like McGrath RentCorp:
(1) Price
(2) Dividends
(3) Returns
Those three basic keys best tell whether a company has made, is making, and will make money.
MGRC Price
McGrath RentCorp's price per share closed at $50.25 yesterday. A year ago their price was $63.37. Price fell $13.12 or just over 20.7% last year.
Assuming McGrath's stock trades in the range of $40 to $70 this next year, its recent $50.25 price might rise by $9.75 to reach $60.00 by July 10, 2021.
MGRC Dividends
McGrath's most recent declared quarterly dividend was $0.42, payable July 31st. That $0.42 Q dividend equates to $1.68 annually for a yield of 3.34% at yesterday's $50.25 share price.
RGP Gains?
Adding the $1.68 annual estimated dividend to my $9.75 optimistic estimate of McGrath RentCorp price upside shows an $11.43 potential gross gain, per share, to be reduced by any costs to trade the shares.
If we put little over $1,000.00 today in McGrath RentCorp we would buy 20 shares of MGRC stock.
A $10 broker fee paid half at purchase and half at sale could cost us $0.50 per share.
Subtract that $0.50 brokerage cost from my estimated $11.43 gross gain per share results in a net gain of $10.93 X 20 shares = $218.60 for a 21.85% net gain on a $1,005.00 Investment.
Thus, McGrath RentCorp shows a possible 21.85% net gain including a 3.34% dividend yield. It could be more, it could be less.
The above speculation is based on past performance and supposition. Only time and money invested will tell if McGrath RentCorp is worth it.
Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, ...
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