Triton shares set for more gains as global trade opens
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Originally Posted On: https://www.monexsecurities.com.au/insights/trading-ideas/triton-shares-set-for-more-gains-as-global-trade-opens/
Many stock traders and investors may have had their eyes glued on lithium stocks recently as electric vehicle companies drive the demand for the metal. Some stock market investors may also have been as nervous as Mark Zuckerberg as they watched the Meta (formerly Facebook) share price drop from US$323 to US$237 in a single day early February 2022, with the share price continuing to sit at around $200 as at publishing.
Amidst all the headline-hogging international shares, some stocks are flying under the radar but are delivering healthy price gains.
One of them is Triton International (NYSE: TRTN), recognised as the world’s largest lessor of intermodal containers – those huge steel boxes used to transport cargo by rail, ship or truck.
Triton may not be a familiar name to many investors and its products may not be as interesting as the social media services that you access on your mobile phones.
However, Triton plays an important part in delivering numerous consumer goods from manufacturers to your home.
Using Triton’s huge fleet of steel box containers, product makers and vendors rely on the company’s services to meet the ever-rising consumer appetite for electronic gadgets, household items, furniture, exotic food and other imported products.
It’s no wonder that when the pandemic hit and lockdowns put an almost total halt to the global supply chain system, Triton’s share price continued to rise.
Triton’s products and services
They may not be the most exciting products in the market, but it may be good to know that almost every consumer item you have at home may have used one of these containers in their journey from the factory to you.
- Dry containers – Used for international shipping of general cargo such as manufactured parts, consumer staples, electronics and apparel
- Refrigerated containers – Used for temperature-sensitive perishable items such as fresh and frozen foods. Think of all the imported food you enjoy such as French, Italian and Greek cheese, prosciutto and other treats from overseas.
- Flat racks – Used for heavy and oversized cargo such as building products and machinery. Consider the building materials and equipment for all the home renovations going on now.
- Open tops – Used for heavy and oversized cargo such as marble slabs, building products and machinery
- Tank containers – Used for bulk liquid products such as chemicals
Strong financial performance in 2021
During the company’s recent corporate reporting, Triton chief executive officer (CEO) Brian M. Sondey said: “We achieved another record quarter of financial performance in the 4th quarter of 2021, which gave us an outstanding finish to an extraordinary year.”
He said the strong performance was supported by favourable market conditions as “US consumers continued to spend during the pandemic.”
Mr Sondey pointed out that the widespread logistical bottlenecks across the world slowed container turn-times, leading to incremental demand for containers.
In his interview with market analysts, Mr Sondey also said that container supply struggled to catch up to demand for most of 2021 despite a significant increase in new container production. This led to record prices for new containers and very high market leasing rates.
Triton capitalised on the strong market conditions to deliver outstanding results in 2021.
Here are the financial highlights from Triton:
- Net income attributable to common shareholders for the 4th quarter of 2021 was US$177.4 million or US$2.67 per diluted share.
- Adjusted net income was US$177.5 million or $2.67 per diluted share, an increase of 57.1% from the 4th quarter of 2020 and 9.9% from the 3rd quarter of 2021.
- Net income attributable to common shareholders was US$484.5 million for the full year of 2021 or US$7.22 per diluted share,
- Adjusted net income was US$614.2 million for the full year of 2021, or US$9.16 per diluted share, an increase of 98.7% from 2020.
- Return on equity was 28.1% in 2021
- Repurchased 1.1 million common shares during the fourth quarter, and has repurchased an additional 0.7 million common shares through February 11, 2022.
A stock analyst who has been following Triton recently issued an update saying: “Since we initially went Long on Triton (TRTN) last May (2021), we have utilised the stock as an overlooked, underappreciated vehicle to benefit from the ongoing supply chain challenges and the elevated leverage that industry players have been enjoying.”
He added: “Following exceptional sequential growth and record profitability during this period, the stock has rewarded us with solid total returns, including a rising stock price and growing dividends.”
What the charts are saying about Triton share performance?
An initial plunge toward the start of the COVID pandemic saw the stock price of Triton nearly halve in the space of a few weeks during February and March 2020.
However, the market quickly rejected this selldown and prices rebounded solidly, returning to the US$40 region by September 2020. Over the following five months, additional gains lifted the stock to the US$60 region. Following a period of consolidation, the stock has gone on to new record highs, pushing above US$68 in mid-February.
While volatility is expected amid the current global turmoil, there is a firm underlying upward bias to the Triton share price. With good support sitting below the market in the region of US$54 to US$58, we favour viewing near term dips as corrective.
The outlook for the global container industry remains strong. This is on the back of easing pandemic restrictions that encourage more consumer purchases.
At the same time, the bottlenecks that clogged the global supply chain infrastructure are gradually opening up. This means demand for more containers will continue to rise.
In anticipation of continuing demand, Triton reported that as of February 11, 2022, the company has ordered approximately US$415 million of containers for delivery in 2022.
As one the largest lessors of containers in the world, Triton International stands in a good position as global trade returns in full force and maybe even stronger than the pre-pandemic levels.
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