‘Tis the Season to be Shipping, Tra-la-la-la

Not surprisingly, delivery services and freight forwarders have been an “industry on the move” recently.  And, as if on cue, FedEx announced before  the bell this morning that it expects to report a profit that is considerably higher than their previous guidance.  FedEx is wayyy out of our field of interest, but there are, in fact, lots of delivery services and freight forwarders in the small-cap world, even if they don’t advertise on the SuperBowl broadcast.

Look at Purchase NY-based Atlas Air Worldwide (Nasdaq: AAWW; http://www.atlasair.com/), for instance.  They may not be cashing in on the Christmas season, but they are delivering big items for big customers.  They just announced this morning, for instance, that they are delivering 55 mine-resistant vehicles to US troops in Afghanistan.  But they do a lot more than just deliver things — they also operate a charter service whose large-client list also includes the US military.  The company sports a market cap of about $725 million, and completed just before Halloween a follow-on stock offering run by Morgan Stanley & Goldman Sachs, raising about $112 million for the general fund.  The shares are trading at $35.07, within kissing distance of  the 52-week high at $37.97, and on good average volume of over 500,000 shares. 

Atlas Air offers a wide variety of aircraft, freight, passenger and logistics services

Then there’s Greeneville TN-based Forward Air Corp (Nasdaq: FWRD; http://www.forwardair.com/), which serves the deferred air freight market — things that need to be moved on aircraft, but not in a mad scramble to get there first.  With a market cap of just under $700 million it is right in our crosshairs, and the stock at $24.02 is not far off its year-high of $26.29, on volume of nearly 700,000 shares a day.

Please do your own diligence before trading or owning any stock — we do not recommend stocks; we just write on interesting companies.

Downers Grove IL-based Hub Group Inc (Nasdaq: HUBG; http://www.hubgroup.com/)   is another case in point.  With a market cap of  just about $1 billion it still qualifies as small cap, and its shares at $26.61 are not far off the year-high of $28.47 on average volume of about 390,000 shares per day.  HUBG is an “asset-light” freight mover that basically contracts its services out in a variety of transport modes, most commonly rail and trucking.  HUBG seems mainly to carry consumer goods and durable goods (your new washer-dryer combo, for instance) in container-size quantities.

Fort Smith AR-based Arkansas Best Corp (Nasdaq: ABFS; http://www.arkbest.com/)  is a less-than-truckload (LTL) specialist, and going on 90 years in the business.  They carry commercial and industrial loads and operate nationwide.  They lost money in their most recent quarter due to the general downturn in the economy, but the way I read their balance sheet, they have around $190 million cash and short-term securities, an almost negligible amount of long-term debt, and a current ratio of a bit better than 1.7:1.  At $27.43, the stock is down from its 52-week high of $34.56 for a current market cap of about $685 million and average daily volume of about 500,000 shares.  Might be worth a gander, since longterm viability does not seem to be a problem.

Finally if special situations appeal to you, have a look at Overland Park KS-based YRC Worldwide Inc (Nasdaq: YRCW, http://www.yrcw.com/) , which is just being dropped from the Dow Jones Transport Index, and is facing a deadline for an exchange offer of equity for debt today (Tuesday the 8th).  The stock has plunged to $1.02 vs a year-high of $6.18.  Today’s market cap is about $60 million, and daily volume on the stock is in the millions of shares as people jockey to get in or out of a company that seems to be accelerating down.  It remains one of the largest transportation service providers in the world, and there are 11 analysts following them who see losses diminishing compared to last year. 

None of these looks like a lump of coal in the Christmas stocking, at least not to us, although YRCW has all the earmarks of a lottery ticket as opposed to a longterm investment.


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