The Iconoclast Investor

Today I’m suggesting you take a look at trucking stocks, which have
been acting very well since fuel prices began coming down.

One of our recent recommendations is Werner Enterprises (WERN), which has
more than 9,000 tractors, 25,000 trailers and 14,000 employees and
independent contractors, spread throughout the U.S., Canada, Mexico, Asia,
Europe and South America.

Werner earned a spot in Cabot Top Ten Report last week, and here’s what
editor Michael Cintolo wrote.

“Trucking firms have enjoyed some heady gains in the past couple of weeks,
and many of them have stretched out to new peaks. So why the strength?
First, investors are clearly anticipating higher earnings now that
gasoline prices are beginning to come down. But that can’t be the only
reason-we think it’s likely the market is looking ahead toward a
faster-than-expected recovery in the economy, or at least in shipping
volumes. In its recent quarterly report (which beat expectations by 25%),
Werner’s management noted that prices are firming up, likely a result of
decent demand and fewer trucks on the road. Analysts are estimating that
Werner’s bottom line will jump 29% next year, but in a cyclical industry
like trucking, that could prove to be conservative if energy prices
continue to decline.”

That was written after the stock had soared from 19 to 24 after the
release of second quarter earnings. At the time, the stock was trading at
23. Mike gave it a recommended buy range of 22-24, believing that the
surge sparked by the earnings report was just the beginning of a longer
uptrend, and in the week since, the stock has traded tamely in that 23-24
region. If you like trucks–or even if you don’t–take a look.

This is taken from the August 4 issue of Cabot Wealth Advisory written by Timothy Lutts.