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3 Trucking Stocks Poised to Continue Their Winning Streaks in 2021
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It is no longer news that the advent of coronavirus has hurt the Zacks Transportation sector big time in 2020 to date. All constituents of the sector like airlines, railroads and truckers have been dented by this ongoing pandemic so far.
As the year draws to a close, we look back at the sector, solely focusing on the trucking stocks in the space. This corner of the sector is hit hard by a slowdown in freight demand and supply-chain disruptions. These headwinds weighed on trucking volumes. However, with the gradual recovery in the economy and improving freight market conditions, things are looking up for the industry. Evidently, the Zacks Transportation - Truck industry, which includes truck operators transporting freight to a diverse group of customers, primarily across North America, has gained 16.7% in the past six months.
Bettering freight conditions as economic activities claw back normalcy are mainly responsible for this double-digit price surge. Notably, the American Trucking Associations’ Truck Tonnage Index inched up 3.7% in November 2020 from the October levels on a seasonally-adjusted basis. Factors like upbeat retail freight and the surge in online spending in the current scenario boosted truck tonnage in November. In fact, the boom in e-commerce demand throughout this pandemic-dominated year, which confined people to their homes, emerged as a huge positive for the trucking companies.
Also, tight capacity and driver shortage in the trucking industry are pushing up spot and contract rates. Per DAT Freight & Analytics, spot market rates for van and refrigerated freight reached all-time highs in November.
Cost-containment measures adopted by various trucking companies to combat the current volatile scenario are driving their bottom lines. As an evidence, total operating expenses declined 9.1% year over year in the first nine months of 2020 at Knight-Swift Transportation Holdings (KNX - Free Report) . Adjusted operating ratio (operating expenses as a % of revenues) improved to 86.6% in the first nine months of Sep 30, 2020 from 88.6% in the same period of 2019, mainly on lower costs. Lower the value of the metric, the better.
What is more encouraging is that 2021 is likely to bring more good tidings for the trucking companies as freight conditions are likely to pick up further. Besides, availability of the vaccines with a few more awaiting clearances next year should ramp up economic activities, aiding freight volumes in turn. This too bodes well for the trucking stocks. According to the American Trucking Associations report, truck freight volumes are expected to increase 4.9% in 2021.
In light of the above-mentioned upsides, we believe, trucking stocks currently boast attractive investment opportunities.
Our Picks
Here we narrow down to three trucking stocks that have rallied more than 20% year to date and are likely to keep zipping along speedily in 2021. Apart from presently carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy), these stocks have a market capitalization in excess of $1 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcBest Corporation (ARCB - Free Report) offers freight transportation services and solutions. Shares of the company have soared 54.9% year to date, driven by an impressive operational efficiency. The improving freight conditions augur well for the stock that currently has a Zacks Rank of 1 and a market capitalization of $1.09 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2021 earnings per share being raised 29.1%.
MartenTransport (MRTN - Free Report) is the owner and operator of a temperature-sensitive truckload carrier for shippers in the United States, Canada and Mexico. The stock has gained 20.9% year to date, aided by the gradual uptick in trucking shipments. The stock currently has a Zacks Rank #2 and a market cap of $1.43 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2021 bottom line being revised 3.3% upward.
Saia (SAIA - Free Report) , based in Georgia, is a leading transportation provider that offers multi-regional less-than-truckload, non-asset truckload, expedited and logistics services. Shares of the company have soared 95.8% this year so far, attributable to the steady expansion in trucking volumes. The stock currently has a Zacks Rank of 2 and a market capitalization of $4.77 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for next-year earnings move 2.3% north.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
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3 Trucking Stocks Poised to Continue Their Winning Streaks in 2021
It is no longer news that the advent of coronavirus has hurt the Zacks Transportation sector big time in 2020 to date. All constituents of the sector like airlines, railroads and truckers have been dented by this ongoing pandemic so far.
As the year draws to a close, we look back at the sector, solely focusing on the trucking stocks in the space. This corner of the sector is hit hard by a slowdown in freight demand and supply-chain disruptions. These headwinds weighed on trucking volumes. However, with the gradual recovery in the economy and improving freight market conditions, things are looking up for the industry. Evidently, the Zacks Transportation - Truck industry, which includes truck operators transporting freight to a diverse group of customers, primarily across North America, has gained 16.7% in the past six months.
Bettering freight conditions as economic activities claw back normalcy are mainly responsible for this double-digit price surge. Notably, the American Trucking Associations’ Truck Tonnage Index inched up 3.7% in November 2020 from the October levels on a seasonally-adjusted basis. Factors like upbeat retail freight and the surge in online spending in the current scenario boosted truck tonnage in November. In fact, the boom in e-commerce demand throughout this pandemic-dominated year, which confined people to their homes, emerged as a huge positive for the trucking companies.
Also, tight capacity and driver shortage in the trucking industry are pushing up spot and contract rates. Per DAT Freight & Analytics, spot market rates for van and refrigerated freight reached all-time highs in November.
Cost-containment measures adopted by various trucking companies to combat the current volatile scenario are driving their bottom lines. As an evidence, total operating expenses declined 9.1% year over year in the first nine months of 2020 at Knight-Swift Transportation Holdings (KNX - Free Report) . Adjusted operating ratio (operating expenses as a % of revenues) improved to 86.6% in the first nine months of Sep 30, 2020 from 88.6% in the same period of 2019, mainly on lower costs. Lower the value of the metric, the better.
What is more encouraging is that 2021 is likely to bring more good tidings for the trucking companies as freight conditions are likely to pick up further. Besides, availability of the vaccines with a few more awaiting clearances next year should ramp up economic activities, aiding freight volumes in turn. This too bodes well for the trucking stocks. According to the American Trucking Associations report, truck freight volumes are expected to increase 4.9% in 2021.
In light of the above-mentioned upsides, we believe, trucking stocks currently boast attractive investment opportunities.
Our Picks
Here we narrow down to three trucking stocks that have rallied more than 20% year to date and are likely to keep zipping along speedily in 2021. Apart from presently carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy), these stocks have a market capitalization in excess of $1 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.
ArcBest Corporation (ARCB - Free Report) offers freight transportation services and solutions. Shares of the company have soared 54.9% year to date, driven by an impressive operational efficiency. The improving freight conditions augur well for the stock that currently has a Zacks Rank of 1 and a market capitalization of $1.09 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2021 earnings per share being raised 29.1%.
MartenTransport (MRTN - Free Report) is the owner and operator of a temperature-sensitive truckload carrier for shippers in the United States, Canada and Mexico. The stock has gained 20.9% year to date, aided by the gradual uptick in trucking shipments. The stock currently has a Zacks Rank #2 and a market cap of $1.43 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for 2021 bottom line being revised 3.3% upward.
Saia (SAIA - Free Report) , based in Georgia, is a leading transportation provider that offers multi-regional less-than-truckload, non-asset truckload, expedited and logistics services. Shares of the company have soared 95.8% this year so far, attributable to the steady expansion in trucking volumes. The stock currently has a Zacks Rank of 2 and a market capitalization of $4.77 billion. Over the past 60 days, the stock has seen the Zacks Consensus Estimate for next-year earnings move 2.3% north.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>