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Aaron’s, Inc. (AAN)

The shares of this rental business were upgraded to “Buy” at Cantor Fitzgerald last month. The company beat its earnings estimates by $0.16 in the most recent quarter.

Aaron’s, Inc. (AAN)
from Upside

Aaron’s, Inc. (AAN) doesn’t operate the most glamorous business—it rents and sells furniture, electronics, and appliances. But the company boasts a strong market position, well-defined growth prospects, and excellent Quadrix® scores.

Growth is benefiting from last year’s $700 million acquisition of Progressive Finance, an internet-based lender to customers that cannot obtain traditional financing. The Overall score of 98 ranks near the top 3% of the more than 5,000 companies in our research universe. Both sector-specific scores are the maximum 100.

Aaron’s should deliver solid profit growth, supported by a decent job market and an improved housing sector. For full-year 2015, consensus estimates project per-share profits will surge 37%. For 2016, earnings are expected to climb 14%. Considering recent operating momentum—per-share profits jumped fourfold in the June quarter—the stock seems reasonably valued at 16 times estimated current-year earnings. Aaron’s is being initiated as a Buy.

Richard J. Moroney, CFA, Upside,, 800-233-5922, September 2015