Dahlman Rose Initiates Coverage On CAI International At Buy, $20 PT

Dahlman Rose is initiating coverage of CAI International CAP with a Buy rating and a $20 price target. In general, Dahlman Rose believes the container leasing industry is in a positive place and has the ability to grow. CAI's size allows the company to move and grow very rapidly.

There are two major positive developments: shipping companies have not yet gone back to ordering their own boxes, and companies can quickly stem the tide of new boxes if world GDP growth slows and over-capacity comes back into the system. It only takes a few months to order and build a container, so leasing companies stop ordering when demand and rates fall. Part of the reason for the 2010 frenzy for dry containers was due to leasing companies not ordering much in the way of containers in 2H08 and 2009.

CAI has a lot of room for upside as the company begins to shift from a US company to a Bermuda-based company. All new containers are going into CAI's Bermuda-based offshore subsidiary, which is having the effect of reducing the company's tax rate.

CAP is trading higher at $24.10