Very few investing sectors represent the current administration better than trucking stocks. First, we must discuss the obvious: those woefully unstylish “MAGA” trucker caps. Joking aside, this economic segment has outperformed the broader indices, and it’s not even close.
Year-to-date, the Dow Jones U.S. Trucking Index is up over 16%. Compare this to the “regular” Dow Jones Industrial Average, which has gained a little over 4%. Moreover, while the benchmark index is having a soft September, trucking stocks have enjoyed increased momentum.
Why is there a strong lift in demand? Primarily, trucking stocks represent a real-time indicator for the economy. If educated and experienced workers are finding robust opportunities, average wages tend to rise. Eventually, consumer discretionary goods fly out of store shelves, requiring increased procurement and distribution.
Secondly, the retail sector has increasingly concentrated on major players, such as Walmart (NYSE:WMT). They have the resources to expand their reach, while smaller competitors struggle to survive. Indeed, Walmart will likely double its truck driver recruitment expenditures by the end of this year.
And after years of choppy performances, the transportation industry is ready to prove that last year was no fluke. Here are seven trucking stocks that will send your portfolio into overdrive.
Trucking Stocks to Drive Your Portfolio: Saia (SAIA)
One of the most recognized trucking stocks, Saia (NASDAQ:SAIA) is an expert in less-than-truckload (LTL) shipments. Several companies today share shipping space with others as their products alone don’t require a full truckload. By sharing space, this spreads costs around, and is more environmentally friendly due to the inherent efficiencies.
But for several years, Saia ironically lacked the efficiency that they marketed to their clients. For instance, margins were notably lower in 2014 than in later years. That’s because management underwent a strategy shift, focusing on profitability while keeping an eye on growth.
So far, the shift has paid off. In their second-quarter earnings report, SAIA rang up $429 million in sales, up nearly 18% from Q2 2017. They’re on pace to exceed last year’s annual revenue by at least double-digit margins.
Some bears may question SAIA and its ability to sustain this momentum. But with tailwinds driving the underlying industry, I wouldn’t bet against this LTL specialist.
Trucking Stocks to Drive Your Portfolio: J.B. Hunt (JBHT)
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J.B. Hunt (NASDAQ:JBHT) has a legitimate claim to be considered a comeback story. From the spring of 2013 through much of 2017, JBHT stock hardly went anywhere. However, it got its mojo going in the second half of 2017, ultimately gaining 19% for the year. This time around, shares are up nearly 11% year-to-date.
The reversal of fortune isn’t just based on technical considerations. Fundamentally, this optimism is justified. For the past few years, J.B. Hunt’s earnings performances were a mixed bag; some quarters, they’ll beat, and in others, they’d disappointingly miss. But this year, JBHT has enjoyed consistency, meeting Q1 expectations, and firmly beating on Q2 profitability targets.
As for whether the transport company can sustain this momentum, I’m giving the edge to JBHT stock. I believe in the growth story, with Q2 producing $2.14 billion in revenue, up nearly 24% from the year-ago quarter. JBHT is also on track for a monster 2018.
Trucking Stocks to Drive Your Portfolio: Marten Transport (MRTN)
Like other trucking stocks, Marten Transport (NASDAQ:MRTN) is in the midst of a recovery campaign. From the early summer of 2014 to late spring of 2017, MRTN stock was a wash. But bullish sentiment entered the transportation sector in the second half of 2017, sending MRTN considerably higher. Currently, shares are up a very respectable 14%.
With such a strong showing among trucking stocks, leery investors are worried about an imminent correction. But compared to the competition, MRTN represents underappreciated stability. For example, the last time Marten missed its earnings target was during Q2 2015. Since then, the company has at minimum met expectations, but has usually exceeded them.
Plus, MRTN has turned a corner in its growth prospects. Fundamentally, the last four years have been a little bit of a mess. However, management has strung together some strong quarters recently, and it’s on pace for a solid 2018.
Trucking Stocks to Drive Your Portfolio: Ryder (R)
In today’s fast-paced business environment, agility has more importance than ever. Therefore, if you’re seeking longer-term exposure to trucking stocks, you’ll want to consider Ryder (NYSE:R).
Unlike other companies in the trucking sector, Ryder offers comprehensive supply-chain management solutions. From transportation to supply-chain optimization to warehousing and distribution, Ryder offers nearly everything an organization needs to ensure proper inventory flow. In addition, R provides rental vehicles, as well as sales of used trucks.
While the company has several components working in its favor, R stock hasn’t resonated with investors. On a YTD basis, shares are down over 5%. That said, this softness offers an opportunity considering that several trucking stocks are flying to the moon.
Moreover, Ryder has demonstrated strong financial momentum. In Q2, the supply chain specialist registered $2 billion in sales, up nearly 17% from the year-ago quarter.
Trucking Stocks to Drive Your Portfolio: Knight-Swift Transportation (KNX)
Source: David Guo via Flickr
Thanks to several economic metrics pointing in the right direction, retailers and other businesses have ramped up their orders. As a result, several key players in the trucking and transportation industry have witnessed stellar performances this year.
Knight-Swift Transportation (NYSE:KNX) isn’t one of them. Since the January opener, KNX stock has slipped nearly 16%. Moreover, the volatility isn’t entirely undeserved. Over the last several quarters, Knight-Swift has produced uninspiring results.
That said, I think the bears are ignoring several bullish factors. For starters, as two giants merged into one, KNX has excellent growth prospects. Indeed, they’re on pace for a lights-out year in 2018.
For investors seeking great value, you’re probably not going to do much better than KNX in this market. Shares are currently trading at 7.6-times trailing earnings, and only 13-times forward earnings.
Granted, it’s a risk, but KNX stock fits the profile of a smart gamble among other trucking stocks.
Trucking Stocks to Drive Your Portfolio: USA Truck (USAK)
On paper, USA Truck (NASDAQ:USAK) has done very well in the markets, gaining over 23% YTD. However, this lofty figure hides the fact that since early February, USAK stock has largely traced a bearish trend channel.
In my opinion, investors are likely leery about USAK maintaining a positive trajectory. Since 2015, USA Truck has suffered disappointing negative sales growth. Moreover, its quarterly performances during this time were very much a mixed bag. Therefore, speculators are quick to hit the sell button after gaining on their bets.
I’m not going to suggest that their actions were shortsighted as USAK has many issues to work out. But for those new to trucking stocks, some positives exist. Namely, I like the growth recovery story. For Q2, USA Truck rang up over $135 million in revenue, jumping 26% year-over-year.
Finally, USAK is on a discount, trading less than nine-times forward earnings. With positive sentiment toward trucking stocks in general, keep an eye on USAK — it just might surprise you!
Trucking Stocks to Drive Your Portfolio: Heartland Express (HTLD)
No matter how great a sector is, I always prefer buying into weakness rather than into rising strength. In many cases, a momentum play has higher probabilities due to their proven viability. Still, I love the idea of buying a turnaround company before it turns around.
If you’re bullish on trucking stocks, and you share my views on discount-diving, take a look at Heartland Express (NASDAQ:HTLD). Against January’s opening price, HTLD stock has dropped more than 9%. Additionally, shares haven’t moved much since early March 2014.
On the flipside, sentiment has steadily improved for HTLD over the last several months. I can’t fault the speculators here. Heartland Express features surprisingly robust financials, including a zero-debt balance sheet. That’s pretty unusual for a trucking company.
Not only that, I’m digging its growth prospects. Sure, Heartland has suffered sharp revenue declines over the years. However, the company is making a legitimate comeback effort. In Q2, HTLD produced nearly $156 million in sales, up over 20% year-over-year.
I’m not going to mince my words: HTLD is a risky play. But if you’ve got the nerve, Heartland has the potential.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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