We came across a bullish thesis on WillScot Holdings Corporation (WSC) on Substack by BlackOpal Research Limited. In this article, we will summarize the bulls’ thesis on WSC. WillScot Holdings Corporation (WSC)’s share was trading at $29.95 as of March 14th. WSC’s trailing and forward P/E were 199.53 and 20.37 respectively according to Yahoo Finance.
A fleet of refrigerated and specialized freight containers sitting in a large warehouse.
WillScot Mobile Mini Holdings (WSC) is North America’s leading provider of flexible modular space solutions, offering a diverse range of temporary infrastructure products. The company operates with an asset-light business model that delivers strong recurring revenue and attractive unit economics. With approximately 260 branch locations across the U.S., Canada, and Mexico, WillScot serves over 85,000 customers across multiple industries. The company’s ability to provide not just modular space but fully integrated turnkey solutions through its Value-Added Products (VAPS) differentiates it from competitors and enhances its profitability. These VAPS include essential add-ons like workstations, furniture, appliances, power solutions, and security systems, allowing customers to immediately use their space “Right from the Start.” This strategy has driven significant growth, boosting revenue per unit and improving operating margins.
WillScot’s business model is built on long-lived, reusable assets with low maintenance requirements, ensuring capital efficiency and high returns on investment. The company’s modular units have economic lives exceeding 20 years, with refurbishment extending their usefulness even further. This approach enhances capital efficiency by reducing replacement costs, while the units retain residual values exceeding 50%. Furthermore, WillScot’s strong pricing power has allowed it to consistently increase rental rates, with modular space rental rates rising 7.8% year-over-year in 2024. Its diversified customer base, where no single customer accounts for more than 2% of revenue, adds resilience against economic downturns and cyclical headwinds.
Management has a proven track record of operational excellence and disciplined capital allocation, consistently targeting a minimum 20%+ internal rate of return (IRR) on new units. Their strategy balances organic expansion with strategic M&A, having completed 36 acquisitions since 2017, including transformative deals like Mobile Mini. This acquisition history has expanded WillScot’s capabilities into adjacent markets such as climate-controlled storage, clearspan structures, and perimeter solutions, increasing its total addressable market. In 2023-2024 alone, WillScot made key acquisitions in these areas, reinforcing its ability to drive profitable growth.
Several macroeconomic trends further support WillScot’s growth outlook. The reshoring of manufacturing to North America is driving demand for temporary space solutions in construction and operations. The increasing frequency of climate-related disasters has highlighted the need for rapid deployment of modular infrastructure, while commercial renovations continue to create steady demand for WillScot’s solutions. These factors, combined with its industry leadership, pricing power, and operational efficiency, position the company for sustained long-term growth.
Valuation-wise, WillScot’s 10 Cap evaluation suggests an attractive entry point. The company generated $561.6 million in operating cash flow in 2024, with normalized owner earnings of $588 million after adjusting for one-time expenses. With 183.6 million shares outstanding, this translates to $3.20 per share in owner earnings, supporting a Ten Cap entry price of $32.00 per share. At its current price of ~$30.00, the stock presents an attractive risk/reward profile, offering strong free cash flow yield and downside protection. Given WillScot’s resilient business model, pricing power, and strategic acquisitions, the market is likely undervaluing the company’s earnings potential. Investors seeking a stable, cash-generating business with strong growth prospects should see WillScot as a compelling opportunity.
WillScot Holdings Corporation (WSC) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held WSC at the end of the fourth quarter which was 52 in the previous quarter. While we acknowledge the risk and potential of WSC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WSC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.