Truckload Stocks Poised to Outperform S&P 500

Mathematics purists know the new millennium really starts Jan. 1, 2001, and a prominent Wall Street analyst believes that will be the beginning of a year when truckload stocks finally soar above the rubble of 1999 and 2000 left by motor carriers that just could not make it.

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The prediction of a new era for truckload stocks is based, in part, on the assumption that these equities have been so thoroughly battered and bludgeoned that their prices have nowhere to go but up. Therefore, the large, well-run carriers that have survived high fuel prices, mammoth insurance rate increases and a shortage of drivers — and still remained profitable — will be rewarded in the coming year with stock prices that rise more rapidly than the Standard & Poor’s 500 Index.

Edward M. Wolfe of Bear, Stearns & Co., and the president of the Motor Carriers Analysts Group, a collection of Wall Street stock analysts who cover motor carriers, offered this assessment Dec. 4 at the Transport Topics Management Outlook Forum.

As with many other investment firms, Bear Stearns puts together industry indexes. Its five-carrier truckload index lost almost 30% of its value from Jan. 1, 1999 to Dec. 1 of this year, dropping to 14.85 from 21.18. In contrast, the broadly based S&P 500 rose by 7% over the same time, increasing to 1,315 from 1,229.

The five companies on Wolfe’s index are: J.B. Hunt Transport Services (JBHT), Swift Transportation Co. (SWFT), Werner Enterprises (WERN), M.S. Carriers, Inc. (MSCA) and Covenant Transport (CVTI). All are co-owners of Transplace.com, an online logistics company specializing in truckload freight.

Based on this low takeoff point, Wolfe expects the carriers on his index — and other good truckload companies as well — to outperform the stock market as a whole, especially in the second half of 2001.

“You have very easy comparisons. You’re coming off of two bad years in a row and expectations are low. Stocks work on expectations, and they look into the future. So the stock market in ‘01 is looking to ‘02 and ‘03 as well,” he said.

For the full story, see the Dec. 11 print edition of Transport Topics. Subscribe today.