Custom Truck One Soars 11%—What’s Fueling This Explosive Rally?

• CTOS spikes 11.36% to $5.74, nearing its 52-week high of $6.11
• Stifel upgrades to 'Buy' with $7 price target after Q2 equipment availability improvements
• TES orders surge 220% YoY, defying analyst concerns over T&D market dynamics

In a volatile late-session surge, Custom Truck One Source (CTOS) erupted 11% on Tuesday, fueled by a rare analyst upgrade and operational momentum in its core transmission & distribution (T&D) rental business. The stock clawed from $5.43 to $5.93 intraday, reflecting renewed investor confidence in its strategic shift toward high-margin rental fleet investments.

Stifel’s 'Buy' Call Ignites Momentum Amid T&D Market Turnaround
The stock’s meteoric rise stems directly from Stifel’s upgraded Buy rating and $7 price target, citing improved T&D market dynamics. Analyst Brian Brophy highlighted a net tightening of equipment availability in Q2 2025—shifting from Q1’s looser conditions—and a 220% year-over-year jump in Truck Equipment Sales (TES) orders. This contrasts sharply with Q1’s EPS miss, as the firm’s strategic focus on rental fleet expansion appears to be bearing fruit. The 40% price target increase (from $5 to $7) signals Stifel’s belief that CTOS can sustainably leverage rising T&D utilization rates, which hit 77.7% YoY.

Bullish Technicals and Option Sweet Spots for CTOS Bulls
RSI: 64.55 (neutral)
Bollinger Bands: Above middle band (4.957)
200-day MA: 4.55 (well below current price)

Bulls should target resistance at $6.10 (52W high), with near-term support at $5.50 (200-day MA). The MACD crossover and RSI stability suggest sustainable momentum. Among options, the CTOS20251017C7.5 and CTOS20260116C7.5 calls stand out:

1. CTOS20251017C7.5: Strike $7.50 (13% above current price)
- Implied Volatility: 44.98%
- Leverage Ratio: 57.45%
- Delta: 0.16 (moderate upside sensitivity)
- Gamma: 0.18 (strong price responsiveness)
- Theta: -0.0021 (slight time decay)
- Turnover: 220 contracts (liquidity edge)
- Why it’s hot: Near-term expiration offers 57% leverage with decent liquidity. A $5.74-to-$7.50 move (13%) would yield a 100% payoff.

2. CTOS20260116C7.5: Strike $7.50 (longer-dated)
- Implied Volatility: 43.75%
- Leverage Ratio: 22.98%
- Delta: 0.27 (higher upside exposure)
- Gamma: 0.18 (similar price responsiveness)
- Theta: -0.0019 (manageable decay)
- Turnover: 0 contracts (wait for liquidity pickup)
- Why it’s hot: Lower volatility premium offers better risk/reward for a sustained rally into year-end. A 5% price rise to $6.02 would put it in-the-money.

Hook: Aggressive bulls should layer into CTOS20251017C7.5 for near-term gains while keeping an eye on the Jan 2026 contract as liquidity improves.

Backtest Custom Truck One Stock Performance
The backtest of CTOS's performance after an intraday surge of 11% indicates mixed results. While the stock experienced a positive change, the returns over various time frames were relatively modest, and the win rates were not exceptionally high.

CTOS Bulls Eye $6—Hold or Fold?
CTOS’s 11% surge underscores a critical inflection point in its T&D business turnaround. While United Rentals (URI) lags with a -0.55% dip, CTOS’s laser focus on high-margin rental growth positions it to outperform sector peers. Investors should monitor the $6.10 resistance level and Stifel’s 2025 EBITDA estimates. With GuruFocus valuing the stock at $7.65 in one year, the path to $7 remains viable—but a close below $5.50 would signal profit-taking. For now, the Stifel upgrade and TES order surge justify selective bullish bets. Action item: Stay long above $5.70, with $6.10 as the next target.