The trucking industry is pretty interesting right now. It's a very good barometer on the overall U.S. economy. A lot of stuff moves around on trucks. Because the market thinks a recession is coming soon, the truck stocks are very reasonably priced. Let me give you an example of one.
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A stock I like in the trucking area is Werner Enterprises (NASDAQ:WERN). They are a truckload carrier. There are two kinds of trucking companies. There are truckload and less than truckload. Imagine a big truck behind your local Walmart that is filled with nothing but Tide. That was delivered by a truckload carrier, like Werner. Werner's business is good right now. Not as good as a year ago, but it's still good. Werner has the most modern fleet in the industry; they've spent a lot of money. That capital spending is over, so now the excess cash flow is going to be really good and they just announced a large, special dividend and a stock buyback. We think that's a great signal of management's confidence in the near future, so Werner is a name we really like in here.
Saia (NASDAQ:SAIA) is another company I like in the trucking industry. It's a less than truckload carrier, so it picks up smaller, industrial shipments, fills up a truck, goes to a centralized place, breaks it up, refills the trucks, delivers them. Business is good. Again, not as good as a year ago. The economy is slowing, but still growing. The interesting thing about Saia is it was mostly a regional business in the Southern U.S. They're now opening facilities in the Northeast, and their customers are following them. So, even if business is slow, they have great growth opportunities in new geographies.
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This article first appeared on GuruFocus.
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