7. Custom Truck One Source Inc. (NYSE:CTOS)
Number of Hedge Fund Holders: 7
Custom Truck One Source Inc. (NYSE:CTOS) is a comprehensive provider of specialty equipment and services, catering to industries such as electric utility transmission and distribution, telecommunications, rail, forestry, and waste management. The company operates through three primary segments: Equipment Rental Solutions (ERS), Truck and Equipment Sales (TES), and Aftermarket Parts and Services (APS). The ERS segment offers rental services for new and used specialty equipment, including truck-mounted aerial lifts, cranes, service trucks, dump trucks, trailers, and digger derricks. The TES segment provides new equipment sales tailored to specific customer requirements across various end-markets. The APS segment delivers maintenance and repair services, alongside the rental and sale of specialized tools and aftermarket parts. With over 40 locations and a workforce exceeding 2,600 employees, CTOS positions itself as a “one-stop-shop” for specialty equipment needs, supporting the full lifecycle from acquisition to disposal. It is among the best penny stocks with insider buying.
Custom Truck One Source Inc. (NYSE:CTOS) owns a substantial rental fleet valued at $1.6 billion and a complementary sales business for new and used trucks. The company primarily serves four key markets: utility (60% of revenue), infrastructure (25%), rail and telecom (each approximately 5%), with a focus on serving major contractors like Quanta, MasTec, MYR Group, and Century. The company has demonstrated strong pricing power, having implemented price increases of 10% in 2022 and 6% in 2023, though maintaining stable pricing in 2024 due to market conditions. Recent performance shows positive momentum with OEC on rent increasing by $200 million in the quarter, with 70-80% of this growth coming from core business demand rather than storm-related work.
Looking forward, management anticipates double-digit EBITDA growth, driven by improved utilization rates returning to the mid-to-high 70s range, continued growth in both rental and sales segments, and potential benefits from lower floor plan interest expenses as inventory levels decrease. Custom Truck One Source Inc. (NYSE:CTOS) maintains a strategic focus on debt reduction with a target leverage ratio of 3.0x, while currently operating at 4.4x leverage. The optimistic guidance is further reinforced by significant insider purchases in the last six months.
