Americans are facing a historic supply chain crisis. The solutions are simple on the one hand and
maddeningly complex on the other. And no industry embodies that complexity more than the trucking
industry. Just getting the barges unloaded will not be enough. Those goods have to be transported to a
final destination.
For that, we’re going to need trucks. And those trucks will need drivers. According to the American
Trucking Association (ATA), approximately 70% of consumer goods in the United States are transported
by trucks. However, for a variety of reasons, the industry faces a shortage of qualified drivers.
How extreme is that shortage? The ATA estimates that the shortage of qualified truck drivers sits at over
50,000 and continues to grow. In fact, it suggests that over 900,000 drivers are needed and there simply
are not enough qualified drivers to meet that demand.
We’re not going to see one million new drivers on the road by the end of the year. And even if we did,
trucking companies will be a beneficiary as the industry rises to meet this moment. This also means that
investors should be eyeing trucking stocks. And that’s why we’ve prepared this special presentation
which identifies seven trucking stocks that are excellent opportunities at this time.
Quick Links
- J.B. Hunt
- Saia
- ArcBest
- Old Dominion Freight Line
- United Parcel Service
- Knight-Swift Transportation
- Covenant Logistics Group
#1 - J.B. Hunt (NASDAQ:JBHT)
J.B. Hunt (NASDAQ:JBHT) is the nation’s leading trucking company and is first on this list of trucking
stocks to buy. Ninety percent of the company’s driving positions are either local or regional. This may be
an important selling point when trying to recruit new drivers. The company offers trucking jobs “in
dedicated, intermodal, truckload, and final mile divisions.”
That last area, the
final mile, has been one of the areas that have made the company an essential business
during the Covid-19 pandemic.
Investors should also be aware that the company just released its
third-quarter earnings with top and
bottom-line numbers that showed strong year-over-year (YOY) gains. And the management was quick to
point out that revenue could have been stronger if not for the labor shortages.
In the lead-up to the company’s earnings report, the company has had its price target boosted by
seven analysts. Six of the seven are above the current consensus target price for JBHT stock. That’s
almost always a bullish signal. J.B. Hunt is number 13 on the MarketBeat list of
100 TransportationStocks.About J.B. Hunt Transport Services
J.B. Hunt Transport Services, Inc provides surface transportation, delivery, and logistic services in the United States. It operates through five segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), Final Mile Services (FMS), and Truckload (JBT). The JBI segment offers intermodal freight solutions.
Read More - Current Price
- $170.23
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $190.11 (11.7% Upside)
#2 - Saia (NASDAQ:SAIA)
Solving the supply chain crisis will require creative solutions to operational challenges. One of those
challenges is the need to deal with trucks that will be less than full.
Saia (NASDAQ:SAIA) specializes in
providing “less-than-truckload services for shipments between 100 and 10,000 pounds. And the
company is focused on delivering custom solutions for expedited and flexible delivery solutions. The
company has opened two new terminals this year and has plans to
open two or three additionalterminals by the end of the year.Investors may want to wait to see what happens when the company reports earnings in late October.
The company has beat analysts’ earnings expectations for the past six quarters. Currently SAIA stock is
trading above the consensus price target of analysts. However, in the last month, the company has
received five upgrades from analysts with four of the five price targets being significantly higher than
the consensus target.
Saia checks in at number 30 on the
MarketBeat list of
100 Transportation StocksAbout Saia
Saia, Inc, together with its subsidiaries, operates as a transportation company in North America. The company provides less-than-truckload services for shipments between 100 and 10,000 pounds; and other value-added services, including non-asset truckload, expedited, and logistics services. It also offers other value-added services, including non-asset truckload, expedited, and logistics services.
Read More - Current Price
- $473.40
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $514.88 (8.8% Upside)
#3 - ArcBest (NASDAQ:ARCB)
Keeping with the theme of delivering creative solutions to the supply chain crisis brings us to ArcBest (NASDAQ:ARCB). ArcBest is one of the leading logistics companies that operates in three segments: Asset-Based, ArcBest, and FleetNet. The company recently announced plans to acquire the Chicago-based MoLo Solutions, LLD. With this acquisition, ArcBest will have access to over 70,000 carrier partners and will be in the top 15 of U.S. truckload brokers.
On October 20, ArcBest announced that it was chosen as a 2022 FreightWaves FreightTech 100 company. This annual award recognizes the most innovative and disruptive freight companies.
Unlike the first two stocks on this list, ARCB stock is trading below the consensus price target of analysts. In addition, the stock has been upgraded by five analysts in the last month. This kind of attention prior to earnings is a bullish indicator. The company reports earnings in early November and has beaten earnings estimates for the last eight quarters.
ArcBest is number 60 on the MarketBeat list of 100 Transportation Stocks
About ArcBest
ArcBest Corporation, an integrated logistics company, engages in the provision of ground, air, and ocean transportation solutions. It operates through two segments: Asset-Based and Asset-Light. The Asset-Based segment provides less-than-truckload (LTL) services, that transports general commodities, such as food, textiles, apparel, furniture, appliances, chemicals, non-bulk petroleum products, rubber, plastics, metal and metal products, wood, glass, automotive parts, machinery, and miscellaneous manufactured products.
Read More - Current Price
- $94.13
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $124.50 (32.3% Upside)
#4 - Old Dominion Freight Line (NASDAQ:ODFL)
One way to consider sector stocks to buy is to look at the stocks that are drawing attention from institutional investors. That’s the case with Old Dominion Freight Line (NASDAQ:ODFL). The company just got its price target boosted by Morgan Stanley (NYSE:MS). But since Morgan Stanley released its new price targets three additional analysts have weighed in. Each has boosted their targets. And each target is higher than the current consensus price target.
Another sign that a stock is a good long-term buy is strong interest from institutional investors. Currently ODFL stock has 70% institutional ownership. The company also issues a dividend that it has increased over 125% in the last two years. With many companies cutting or suspending their dividends during the pandemic, that gave investors who bought into ODFL stock a nice total return.
ODFL stock is already up 63% in 2021. The company is number 8 on the MarketBeat list of 100 Transportation Stocks
About Old Dominion Freight Line
Old Dominion Freight Line, Inc operates as a less-than-truckload motor carrier in the United States and North America. The company offers regional, inter-regional, and national less-than-truckload services, as well as expedited transportation. It also provides various value-added services, including container drayage, truckload brokerage, and supply chain consulting.
Read More - Current Price
- $181.37
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 14 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $204.00 (12.5% Upside)
#5 - United Parcel Service (NYSE:UPS)
When it comes to last mile delivery, there are few better options than United Parcel Service (NYSE:UPS). The stock is up 15% in 2021. However, investors that bought into UPS stock at the beginning of the pandemic have been rewarded with an 80% gain in the company’s stock price. And those investors got an even higher total return with the company’s dividend that has been increasing for the last 12 years.
UPS is aggressively pivoting into the electric vehicle (EV) space. As an additional catalyst for the stock, UPS announced an agreement with Arrival to purchase 10,000 electric vehicles. Unlike long-haul delivery which is not quite ready for electrification, EVs are becoming a compelling solution for last-mile delivery companies because the short distances remove the issue of range anxiety.
The stock is beginning to look overbought but recent analyst reports are trending in a bullish direction. UPS is the top stock on the MarketBeat list of 100 Transportation Stocks.
About United Parcel Service
United Parcel Service, Inc, a package delivery company, provides transportation and delivery, distribution, contract logistics, ocean freight, airfreight, customs brokerage, and insurance services. It operates through two segments, U.S. Domestic Package and International Package. The U.S. Domestic Package segment offers time-definite delivery of express letters, documents, small packages, and palletized freight through air and ground services in the United States.
Read More - Current Price
- $125.68
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $151.29 (20.4% Upside)
#6 - Knight-Swift Transportation (NYSE:KNX)
Knight-Swift Transportation (NYSE:KNX) is up 30% for the year, but is showing signs of reaching a top. However the stock still appears to be a good value with a P/E ratio of just 15.52 which is more than 50% lower than the average of the S&P 500 Index as of September 24, 2021. The company also offers a dividend which has been growing in the last two years.
The company tags itself as “part of North America’s largest truckload fleet” and offers a wide variety of truckload services through its three divisions: a trucking division, a logistics division, and an intermodal division.
The company reported earnings on October 20 and posted adjusted earnings per share (EPS) of $1.30 which was 64% higher than the same quarter in 2020. Revenue was 32.8% higher on a YOY basis. Both numbers show the extent of the current supply chain crisis.
Knight-Swift Transportation is number 25 on the MarketBeat list of 100 Transportation Stocks. About Knight-Swift Transportation
Knight-Swift Transportation Holdings Inc, together with its subsidiaries, provides freight transportation services in the United States and Mexico. The company operates through four segments: Truckload, Less-than-truckload (LTL), Logistics, and Intermodal. The Truckload segment provides transportation services, which include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations.
Read More - Current Price
- $51.95
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $57.00 (9.7% Upside)
#7 - Covenant Logistics Group (NASDAQ:CVLG)
Covenant Logistics Group (NASDAQ:CVLG) is a small-cap stock that closes out this list. The company operates in four segments (expedited, dedicated, managed freight, and warehousing) throughout the United States. Once again, the focus on expedited delivery will be a key to helping work through the current supply-demand imbalance. The company has three corporate facilities in Greenville, Chattanooga and Nashville and has multiple shops, terminals, and warehouse locations spread out over 38 states.
Investors may not be familiar with the name but that’s because the company, formerly known as Covenant Transportation, has just completed a multi-year rebranding effort.
The stock is currently trading below the consensus price target of analysts. The company reported earnings on October 20, and the company has a consistent history of beating analysts’ earnings expectations. Covenant Logistics Group is currently not on the MarketBeat list of 100 Transporation Stocks.
About Covenant Logistics Group
Covenant Logistics Group, Inc, together with its subsidiaries, provides transportation and logistics services in the United States. It operates through four segments: Expedited, Dedicated, Managed Freight, and Warehousing. The Expedited segment primarily provides truckload services with high service freight and delivery standards, such as 1,000 miles in 22 hours or 15-minute delivery windows.
Read More - Current Price
- $54.38
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $69.50 (27.8% Upside)
Unprecedented challenges create unprecedented opportunities. That’s the way investors need to view
the current supply-demand disruption. Trucking stocks have done well throughout this bull market that
has spanned longer than a decade. But there’s no question that it’s been one of the fastest-growing
sectors since the onset of the pandemic. Many of these stocks are currently trading at all-time highs.
But that doesn’t mean the run is over. With hundreds of barges sitting off the coast of California, there is
bound to be increased demand for trucking services. And even with labor costs likely to increase, those
costs should be easy to pass through the supply chain as many companies will be willing to pay
whatever it takes to get goods on their shelves.
While all Americans are hoping for a timely resolution of what we all hope will be a temporary
disruption, it will keep trucking stocks on the front burner for investors. And earnings season will give
investors a chance to hear from the companies themselves regarding the outlook for 2022.
More Investing Slideshows:
