The Trucking Transportation industry is RED HOT. The current Zacks Industry Rank is #12 out of 265 (Top 5%). With a full complement of 17 publicly listed companies involved in the space, this is a solid outperformance story to tell.
Let’s walk through its Zacks Industry Rank story that has evolved this summer.
In June, the Zacks Trucking Industry Rank was good, but not truly RED HOT. It was #40 in early June, and #53 in mid-June. Then, matters picked up notably. By late June, we saw the first mark into the Top 10% of our system. Early July was #19, then #16 and now #12.
What gives? Here is how a Journal of Commerce (JOC) article – out on July 18th, 2018 – put the situation amongst the nation’s truckers:
“Shippers facing double-digit rate increases in an unprecedented tight trucking market are increasingly willing to consider shorter-term contracts and volume guarantees to secure needed capacity, and hopefully some measure of control over runaway transportation costs.
“With the autumn peak-shipping season fast approaching, capacity is very tight on the rails as well as roads, and the U.S. freight economy is looking strong well into 2019. There’s pressure to deal now. Truckload spot rates are easing in mid-July, but they remain at near-record highs.”
“Shippers are willing to pay more to assure the fact that when they call, a truck is going to be there,” said Charles W. “Chuck” Clowdis, managing director of research and consulting firm Trans-Logistics Group. “They’re willing to assure volumes in order to ensure capacity.”
Consult the rocketing trucking spot rate chart, shown above.
And finally, here’s a note of caution!
As a stock strategist, I speak correctly to this Trucking Industry as RED HOT. As a PhD. Economist, I also speak correctly to this Trucking Industry as OVERHEATING.
What’s the difference?
A. Red-hot means (to me) these stocks are on a share price momentum run, with fundamental fuel to keep going for a while. This is thought of in terms of weeks and months.
B. At the same time, this will be seen by a bevy of Fed economists, who manage the U.S. economy, as a clear sign of inflationary pressure. Rate hikes get a green light. That’s overheating. Over a year or two or three, a price bubble forms, and it bursts.
These trucking stocks are all small and mid-cap stocks. In that sense, they are part of the lift that is propelling the Russell 2000 small-cap index to new heights.
To conclude, here’s the Zacks Trucking Industry Rank story in short. Trucking share prices are merely following U.S. trucking spot rates – higher and higher.
Three Top Zacks Rank Trucking Stocks—
(1) Covenant Transport, Inc. CVTO: This $557M market cap stock has a forward P/E of 15.16 and a Zacks Rank #1 (STRONG BUY). It also holds an A for Zacks Value and a B for Zacks Growth.
The company is a truckload carrier that offers just-in-time and other premium transportation service for customers throughout the United States.
(2) Marten Transport, Ltd. (MRTN - Free Report) : The $1.3B market cap stock has a forward P/E of 24.11 and a Zacks Rank #1. With that higher P/E, it gets only a B for Zacks Value and it comes with a D for Zacks Growth.
This company is a long-haul truckload carrier providing protective service and time-sensitive transportation in the United States.
The company specializes in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment.
Marten operates through these featured services – Truckload, Dedicated, Intermodal and Brokerage. Marten Transport offers service in the United States, Canada and Mexico, concentrating on expedited movements for high-volume customers.
Marten is headquartered in Mondovi, WI.
(3) ArcBest Corp. (ARCB - Free Report) : The $1.2B market cap stock has a forward P/E of 15.95 and a Zacks #2 (BUY) rank. It also holds an A for Zacks Value and an A for Zacks Growth.
This company provides freight transportation services and solutions.
The company's Freight Transportation segment offers transportation of general commodities; motor carrier freight transportation services; business-to-business air transportation services; ocean transport services; global customizable supply chain solutions and integrated warehousing services.
Its Premium Logistics & Expedited Freight Services segment provides expedited freight transportation services to commercial and government customers; premium logistics services; and domestic and international freight transportation with air, ocean and ground service.
ArcBest, formerly known as Arkansas Best Corporation, is headquartered in Fort Smith, Arkansas.