I have been studying Pat Dorsey this week. Moat guy. Built Morningstar's entire moat rating system, then quit to run his own concentrated fund. Eleven positions, no filler.

If you have ever seen a 13F headline and been tempted to copy the trade without checking the entry price, this is the example to learn from.

His third-largest position, 11.43% of the fund, is a company that rents you the bulldozer, the generator, and the scaffolding, then wants all of it back in six weeks. Sunbelt Rentals. Ticker SUNB. I had never looked at it before this week. Here is what I found.

The business, plainly

Sunbelt Rentals owns none of the things you would remember it for and all of the things a job site cannot run without. Excavators. Generators. Temporary power. Scaffolding. Climate control units for hospitals mid-renovation. Over 1,000 locations across the US, UK, and Canada. Roughly 85% of revenue is American.

Until February 2026, this company traded in London under the name Ashtead Group. Then it redomiciled, renamed itself after its own American subsidiary, and moved its primary listing to the NYSE. New ticker: SUNB.

Fiscal 2026, the year that just closed: $11.15 billion in revenue, $4.68 billion in adjusted EBITDA, a 41.9% margin. Free cash flow of $2.06 billion. Net debt of $7.55 billion, 1.6 times EBITDA, a level most industrials would call comfortable. The company returned $1.88 billion to shareholders last year, $1.41 billion of it in buybacks.

Current price: $69.61. Market cap: roughly $28.5 billion.

Why Dorsey sized up to 11%

I could not find an on-record Dorsey quote naming Sunbelt specifically. I am not going to invent one. Here is what is true regardless of what he said.

Equipment rental is a density game. The bigger your fleet and the denser your branch network, the better your OEM pricing, the higher your utilization, and the more likely you win the national account a regional competitor physically cannot service. Sunbelt has spent three decades buying small regional rental shops and folding them into existing branches. That is not a growth story. That is a compounding machine with acquisitions as the fuel.

Sunbelt holds 11% of the North American equipment rental market. Only United Rentals is bigger.

Then the redomicile. Roughly 85% of the revenue is American, but until five months ago the stock traded in London, excluded from US index funds, uncovered by most US analysts, sitting there with the stale, overlooked smell of a stock nobody bothers to re-underwrite. Moving the primary listing to the NYSE does not change one branch, one generator, or one contract. It changes who is allowed to buy the stock. That is the kind of mispricing a moat investor sizes up into.

The business did not get better in February.

The buyer pool did.

The crack in the story

Here is the part that should not get skipped past. Rental revenue growth guidance was just narrowed to 2% to 3%, down from an earlier range of 0% to 4%. That is soft. Historically this business compounded well above that through its roll-up years.

Picture the average American job site right now: fewer permits breaking ground, the same fleet of yellow iron sitting one notch longer between rentals. Private nonresidential construction is projected to shrink 2.6% in 2026 before rebounding 4.1% in 2027. The infrastructure-bill spending wave that lifted the whole sector is winding down. Equipment rental overall is forecast to grow about 2.3% this year, a real slowdown from prior years. Sunbelt is not uniquely weak here. But a moat does not cancel a cycle. It just means you survive the cycle better than the guy renting from a single lot in Ohio.

The valuation gap

Sunbelt trades at roughly 7.7 times EV/EBITDA. United Rentals, the bigger competitor in the same market, trades at roughly 13.75 times. Say the two numbers out loud, 7.7 versus 13.75, and the gap does not get quieter the second time. That is the single best argument for the stock: if the NYSE move gradually earns Sunbelt the coverage and index flows United Rentals already has, some of that gap should close on its own, with no change to the underlying business required.

One honest flag: I pulled conflicting P/E figures for SUNB from different data providers, a common problem right after a redomicile changes share count and reporting currency. I am not going to paper over that with false precision. The EV/EBITDA gap versus United Rentals is the cleaner comparison, and it is wide enough to matter even after accounting for some data noise.

Five scenarios, 24 months out

| Scenario | Price target | Move from $69.61 | What has to happen | |---|---|---|---| | Super Bull | $166 | +138% | Nonresidential construction and AI-datacenter capex reaccelerate, Sunbelt 4.0's specialty rental mix lifts margins to 43%+, and the NYSE listing earns a genuine re-rating toward United Rentals' multiple (12x). | | Bull | $112 | +61% | Growth guidance beats into the 5-6% range, margins tick up modestly, the market closes part of the valuation gap (9.5x). | | Base | $79 | +13% | Growth holds near the current 2-3% guide, margins flat, multiple stays right where it is today (7.75x). No re-rating, no further deterioration. | | Bear | $53 | -24% | Growth slows further toward 1%, margins compress on operating deleverage, the multiple discount to United Rentals widens instead of closing. | | Super Bear | $25 | -64% | Nonresidential construction rolls into a real downturn, rental rates fall on oversupply, leverage becomes a real constraint, buybacks get suspended, multiple compresses to a crisis-level 5x. |

I built this table myself from Sunbelt's own reported numbers and my own assumptions on growth, margin, and multiple. It is not a Wall Street price target. Treat it as a framework, not a forecast.

The expected return, honestly

Weight those five scenarios at 10%, 25%, 35%, 22%, and 8% respectively. Those are my own odds, not a model's and not anyone else's forecast, reflecting a market more likely to muddle through the current soft patch than break sharply either direction.

Do that math and the expected return is roughly 9.8% a year, including dividends, over the next two years.

That is not a bad number. It is also not a great one, and the shape of it is the problem: the two scenarios that get me paid well both require something outside Sunbelt's control, a full macro reacceleration and a genuine re-rating that has not started yet. The two downside scenarios require something that is already visible today: soft guidance, a decelerating industry, real financial leverage that amplifies any multiple compression. Base case is a coin flip that leaves a middling aftertaste either way.

What I am actually doing

Not buying today. The weekly RSI sits around 57, nowhere near the oversold reading I want before I size into a cyclical, leveraged business. The daily RSI is closer to 28, technically oversold, but a daily reading without weekly confirmation is noise, not a signal, and I do not act on noise.

This goes on the watchlist next to Sunbelt's stablemates from Dorsey's book: ASML, AerCap, AppLovin, Danaher. The entry trigger is one of three things: weekly RSI below 30, growth guidance moving back above 4%, or a drawdown that prices the stock closer to my Bear case than my Base case. Any one of those, and I run the numbers again.

Good business. Real moat. Genuine catalyst. Wrong price, for now.

Waiting is a position too. You do not need to own this today to prove you saw it early.

You can run this same five-scenario test on anything sitting in your own watchlist before the market prices it for you. That is exactly what I built the Compounding Portfolio system inside the Sprint Club to do: strategysprints.com

Happy hunting. Simon & The Sprinters 🐬⚡️🐆