Now that the stock market is not hitting new highs each day, investors are looking for value stocks.  They might be looking for value inside sectors either with companies trading at the lowest earnings multiples, or maybe they are just looking for the best quality in those which have sold off the most.  Our value screen today comes to TAL International Group, Inc. (NYSE: TAL) against some peers in the shipping sector on the heels of two positive analyst notes that are coinciding with each other.

If the indications are anywhere close to accurate, TAL International is a value stock that should be worth a look in the transport segment of leasing intermodal containers and chassis.  Keefe Bruyette & Woods raised its rating to Outperform with a $41 target based upon its current pricing and discount.  More importantly, or in more detail, comes an internal research audio-video report from a Thomson Reuters analyst calling TAL International a Stellar Small Cap. 

One comparison is to Textainer Group Holdings Limited (NYSE: TGH) but TAL International has a better dividend after looking at the two as it pays 6% in yield versus not quite 4% at Textainer.  Another relative play is in the much smaller company called SeaCube Container Leasing Ltd. (NYSE: BOX), but even with some more attractive multiples SeaCube slightly lags with a 5.4% dividend yield.

Mike Tarsala sees TAL International as having solid business and pricing power with about 98% of its containers in use.  He calls it a $35 stock with about 29% upside to $45 if it meets earnings targets this year.

After these two calls coincided in TAL, we wanted to see what else was driving the stock (up or down)…

TAL International was just given a #3 Hold rating at Zacks.  Just a week ago came an initiation of TAL International by Wells Fargo with a target range of $42 to $45 per share.  In late-April came word that R.W. Baird cut the rating to Neutral with a $40 target.  In the last few days the company also closed on a $235 million note offering, which was rated as “A” by credit rating.  It also got its earnings out of the way at the end of April.

At $32.95 its 52-week trading range is $20.43 to $38.45 and its market cap is about $1.05 billion.  TAL International has consensus Thomson Reuters estimates of $3.41 EPS for 2011 and $3.70 EPS in 2012 and that gives forward earnings multiples of 10-times expected 2011 earnings and 9-times expected 2012 earnings. 

A consensus price target from Thomson Reuters measures the external anaysts out there and that price target objective is $42.67.  If the consensus is right, then the upside for TAL International is almost 30% for investors today.

JON C. OGG

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