< The 2015 All-America Research Team
David Raso
Evercore ISI
First-Place Appearances: 15
Total Appearances: 15
Analyst Debut: 2001
In 2001, David Raso earned his first appearance on this slate, shooting straight in as the No. 1 U.S. machinery analyst, and he has maintained that ranking every year since. Covering the sector for Evercore ISI since December 2008, when he left Citi, Raso boasts the longest winning streak among the 11 All-America Research Team Hall of Famers who earn first place this year. The 45-year-old is ”consistently the best stock picker in industrials,” attests one portfolio manager. “David does the down-and-dirty work of real world research, spending time with companies and at trade shows, surveying users and supply chains, and never just regurgitating what management says.” At the beginning of this year, Raso advised that his proprietary construction equipment dealer survey indicated an imminent slowdown in earnings growth, in part from exposure to declining energy prices, so he turned negative on Stamford, Connecticut’s United Rentals, a leading rental and leasing services provider. He reduced his rating on the name to sell, at $92.25, capturing a 39.6 percent run-up in the stock since November 2013, when he recommended buying it; during the same period, the sector gained 5.9 percent. Subsequently, by early August, United Rentals had slid 29.2 percent, to $65.28, lagging its peers by 27.2 percentage points, and he changed his stance to hold, on valuation. It closed at $67.13 in mid-September, up 2.8 percent against the sector’s 8.4 percent decline. Reporting on 13 companies, the analyst prefers Glenview, Illinois–based Illinois Tool Works, regarding the welding equipment supplier as a safe haven with transparent, predictable earnings gains. Upgraded from neutral to buy in August 2014, the shares had advanced 4.6 percent by the middle of last month, closing at $84.78 and outperforming the U.S. machinery group by 15.6 percentage points. Raso’s price target is $101. “This guy just digs really deep and knows the pulse of the industry,” remarks another backer.
