The transportation sector is a classic recovery play, but investors who want to profit from the global economy’s rebound should remain cautious of many cyclical stocks because they typically stumble when overall growth loses steam — and it’s quite apparent that this recovery is uneven.

A safer bet on transportation growth is Wabash National (WNC), a manufacturer of semi-truck trailers based in Lafayette, Indiana. With a market cap of $750 million, Wabash is a smaller but leading designer, manufacturer and marketer of transportation products in North America.

If you want to get on the cyclical stock bandwagon, Wabash is a shrewd play. It’s an undervalued cyclical company that’s on an upward trajectory and which also boasts a competitive edge: technological innovation. By dominating its respective field, this transportation company offers growth that’s cushioned against economic dips.

Best of all: Wall Street just gave investors a chance to pick up WNC stock at bargain prices.

Wall Street Misses the Point With Wabash National

After the market closed yesterday, Wabash reported third-quarter 2014 results that broke company records. WNC stock earnings came in at $18.3 million, or 25 cents in diluted earnings per share (EPS), compared to $16.2 million, or 23 cents, respectively, in the same quarter a year ago. Third-quarter revenue increased 12% year-over-year to $492 million.

Operating income for WNC stock increased $1.1 million, or 3%, to $34.9 million compared to the year-ago period. Operating EBITDA was $46.6 million for the third quarter, an increase of $1.7 million compared to the year-ago period.

WNC stock is actually down more than 15% today because EPS came in a penny short of expectations, and revenues also came up short of what analysts were expecting. But that’s just Wall Street being too short-sighted. Wabash National has a strong business behind it, as shown by the various year-over-year increases in earnings, operating income, etc.

Wabash National’s core business is standard and customized semi-truck trailers; it’s also a specialized innovator with an entrenched customer base. In addition to its old line manufacturing business, the company makes sophisticated equipment that’s “intermodal,” which is containerized freight that can travel via truck, rail or ship. It also designs parts that make trucks more aerodynamic.

Wabash’s major competitors, such as giant Caterpillar (CAT), are more vulnerable to economic vicissitudes because of their size and presence in several other cyclical niches. If you’re worried about today’s volatile investment climate but don’t want to sit out a market that’s still in a bull run, Wabash National is a great example of  “defensive growth.”

Wabash National’s growth prospects are gaining speed, as the trucking industry’s fortunes revive along with the economic recovery. During the nascent stages of the current recovery, most trucking operators were hesitant to replace or repair aging trailers because of unpleasant memories of the Great Recession, which clobbered trucking especially hard.

Now that recovery is genuine (albeit fragile), these truckers are reducing their backlog of deferred repair and replacement requirements, funneling a long-term supply of orders to Wabash that should withstand the next downward slope of the economic bell curve.

To further protect itself from the economic cycle, Wabash National has been diversifying into the manufacture of high-technology products that improve the fuel efficiency of semitrailers.

With a 12-month trailing price-to-earnings ratio (P/E) of only 15, Wabash’s stock trades at a hefty discount to the trailing P/E of 40 of the trucking industry. And considering the stability of its business, Wabash National seems to be a real bargain after today’s drop. Investors can ride this undervalued stock a long way.

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As of this writing, John Persinos did not hold a position in any of the aforementioned securities.