Trucking stocks have, historically, been among the dullards of the equity markets. Today, however, thanks to the recession and recent volatility throughout the sector, some trucking stocks have been beaten down by more than 90 percent. Can that be opportunity we hear knocking?
Take, for instance, Overland Park, KS-based YRC Worldwide Inc (Nasdaq: YRCWD, http://www.yrcw.com), the nation’s largest trucking company in terms of sales and a company that once boasted a multi-billion dollar market cap (now about $258 million) and a stock price near $100 (now about $5.50). The company barely avoided bankruptcy last January, thanks to a plea from a noted trucking name–Hoffa, as in James Hoffa–the Teamsters Union and a debt swap completed by Goldman Sachs (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=akW2fq12ZKOA).
Shortly thereafter, investment firm Wolfe Research issued a report (http://www.joc.com/trucking/ltl-pricing-firm-later-2010-wolfe-says) predicting that “less-than-truckload, or LTL in trucking lingo, pricing will “begin to firm” in the second half of 2010. The dive LTL pricing took in 2009 was one of the reasons for the demise in trucking and one of the many woes of struggling YRC. Furthermore, YRC recently announced a 5.9 percent general rate increase (GRI) for truckers, which is considered extremely rare, but these rate increases go straight to the bottom line, which should be a boon to all trucking industries. Finally, the recession has prompted many carriers to shrink their networks meaning “rolling stock” is close to 100 percent capacity at many firms.
Given all this volatility, what are some smallcap trucking names to consider?
Cudahy, Wi-based Roadrunner Transportation Systems (NYSE: RRTS, http://www.rrts.com) operates as a non-asset based transportation and logistics services company and provides a suite of trucking solutions including domestic and international air services. RRTS, which is trading at about $10.76, near its 52-week low of $10.61 (52-week high is $15.05) has dropped down to a $325 million market cap and trades on verage about 100,000 shares a day.
Fort Smith, AR-based Arkansas Best Corp. (Nasdaq: ABFS, http://www.arkbest.com) provides shipping services of general commodities such as food, textiles, apparel, furniture, appliances, chemicals, nonbulk petroleum products, automotive parts, wood, glass and machinery. It’s currently trading for about $23.50 (52-week range is $18.84-$33.54) and has a market cap of about $600 million.
Indianapolis-based Celadon Group (NYSE: CGI, http://www.celadontrucking.com) provides a variety of transportation and logistic services between the U.S., Canada and Mexico and has a market cap near $300 million. The stock price has been on the upswing since dropping to just over $11 in late August and Stifel Nicolaus upgraded its rating from hold to buy in early September. The stock is currently trading at just under $13 (less than its 52-week high of $16.80.
Chattanooga, TN-based Covenant Transport Group (Nasdaq: CVTI, http://www.covenanttransport.com) offers truckload transportation and brokerage services primarily in the continental U.S. The company provides long haul, dedicated, regional solo-driver and regional temperature-controlled services. Currently priced just under $7.50, CVTI trades about 100,000 shares a day, has a market cap of about $100 million and has a 52-week range of $3.02-$9.90.
Johns Creek, GA-based Saia Inc (Nasdaq: SAIA, http://www.saia.com) is an asset-based trucking company providing transportation and supply chain solutions. It serves various industries, including the retail, chemical and manufacturing industries. SAIA is currently trading near $14.50, right in the middle of its 52-week range of $11.25 to $17.74 and has amarket cap of $230 million.