The trucking industry is riding into market leadership, with companies including Knight-Swift Transportation NYSE: KNX, Yellow NASDAQ: YELL, Werner Enterprises NASDAQ: WERN
and Old Dominion Freight Line NASDAQ: ODFL
showing fundamental and technical strength.
The industry was in the spotlight Thursday, as President Joe Biden rolled out the Truck Action Plan, an initiative designed to help ease supply-chain constraints. The plan hopes to recruit and train more truckers.
In an October report, trade group the American Trucking Associations estimated that in 2021 the truck driver shortage will hit a historic high of just over 80,000 drivers. “This figure is the difference between the number of drivers currently in the market and the optimal number of drivers based on freight demand,” it said.
The White House initiative includes:
- Taking steps to reduce barriers to drivers getting commercial driver’s licenses
- Kick off a 90-day challenge to accelerate the expansion of registered apprenticeships
- Conduct veterans-focused outreach & recruitment
- Launch joint Department of Transportation and Department of Labor “Driving Good Jobs” initiative
With the trucking industry occupying a critical place in the supply chain, it’s not surprising that industry stocks are on the rise.
Knight-Swift, the biggest asset-based full-truckload carrier in the nation, is up 2.19% in the past month and 15.11% in the past three months. The stock rallied to a high of $61.87 on December 13, and pulled back. Mid-session Thursday it was trading 1% below its 10-day moving average.
Revenue accelerated in the past four quarters, while earnings grew at double-digit rates in the past five. Analysts see an earnings increase of 66% this year, to $4.52 per share.
The stock is currently in buy range, as it remains well above its 21-day and 50-day lines, despite some selling Thursday.
MarketBeat data show that analysts have a “buy” rating on the stock with a price target of $62.10, representing a 3.90% upside.
Yellow, a small company with a market cap of just $633.4 million, specializes in less-than-truckload networks throughout North America.
The stock advanced 131.75% in the past three months and 186.68% year-to-date. It pulled back from a December 6 high of $15.24 and is trading 10.7% above its 50-day average.
The company swung to profitability in the most recent quarter, following losses in the 2019, 2020 and 2021 fiscal years. Revenue growth resumed in the past three quarters, after several quarters of declines.
As long as Yellow holds above its 50-day line, it may be buyable. However, it’s a risky stock, with a beta of 1.73, and may prove to be a more volatile holding than large caps from the trucking industry.
Werner Enterprises has been forming a consolidation that’s corrected 15% so far. This is a mid-cap, with a market capitalization of $3.081 billion.
In terms of revenue, the company is among the top full-truckload companies. Its fleet consists of more than 8,000 trucks and 24,000 trailers. Its network includes owner-operators. More than three-quarters of revenue comes from full-truckload shipping services, with the bulk of the remainder from logistics operations.
Revenue growth accelerated in the past two quarters, from 4% to 19%. Earnings grew at rates between 14% and 70% in the past five quarters, although it’s been decelerating in the past two.
In late November, the company completed the acquisition of NEHDS, for a total of $64 million. NEHDS operates a fleet of over 400 delivery trucks primarily in the Northeast and Midwest corridors.
As it’s currently consolidating, it’s premature to consider Werner a buy.
Old Dominion Freight Line has a market capitalization of $40.63 billion. It joined the S&P 500 two years ago, so it’s apt to benchmark its performance against that index.
The stock is up 21.66% in the past three months and 81.56% year-to-date. That’s trouncing the performance of the S&P 500, which is up 4.35% in the past three months and 24.86% year-to-date.
ODFL’s revenue has grown for the past five quarters, accelerating from single to double digits. Earnings grew between 25% and 85% during that time.
MarketBeat earnings data show that ODFL has beaten earnings and revenue views in each of the past six quarters.
The stock has been trading in a potentially constructive sideways pattern in the past five weeks. It’s currently finding support along its 10-week moving average and could be considered in a buy zone.
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