As the nation heads down the road to economic recovery, the big rigs are revving their engines.
“Long-term outlook for the trucking industry is good,” said Jim Corridore, transportation industry analyst at Standard and Poor’s. “Even though the market would indicate otherwise, the trucking industry is picking up steam.”
Trucking stocks do well in the early stages of a turnaround, analysts say.
As the nation gets over its economic slump, manufacturing and other production measures are starting to rise. The Federal Reserve reported that industrial production increased 0.8 percent last month – the biggest increase in 14 months.
More production means more freight, and more freight means more trucking. Even cargo that travels via ships and airplanes is almost always loaded to and from trucks.
Truck tonnage is up 1.8 percent in the past year, according to the American Trucking Association.
“The economy is at the early stages of what is hopefully an upswing, and trucking companies are positioned well to benefit,” said Corridore. “They’ve cut a lot of capacity out of the industry and the supply of skilled drivers is in their favor.”
Corridore likes two truck stocks: Yellow Corp. and Landstar System Inc. He finds Yellow “attractive” because “they’ve done a good job cutting costs and should be well positioned for an upcoming upside in economy.”
As for Landstar, “I think they have a unique operating model,” he said. Landstar doesn’t own its own trucks, instead hiring independent owner-operators – and potentially saving millions in upkeep.
Douglas Col, analyst for Morgan Keegan, is also hitting the gas on trucking stocks.
He follows 12 of the biggest trucking companies and has “buy” ratings on five: Heartland Express Inc., because “they’ve always been focused on the bottom line”; Swift, which is “restoring margins”; and Landair Corp., US Xpress Enterprises and Covenant Transport.