Next week is the official kickoff to earnings season with Alcoa (NYSE: AA) heading the parade on Monday after the bell. The reality, however, is that next week will still be slow in terms of the number of reports for options trading investors. Though we’ll see a few big banking names, including JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC), along with an Internet search firm you may have heard of — Google (NASDAQ: GOOG) — things don’t really get rolling until the following week.
Despite the small numbers, we found one stock you should consider. It’s trucking company J.B. Hunt Transport Services (NASDAQ: JBHT), which reports earnings after the bell on Thursday, April 14. Analysts expect a 31% increase in per-share profits from a year ago, which is lower than the 45% the company has averaged over the past four quarters.
Performance after recent reports is solid, though unspectacular. The stock usually is a few percentage points higher a couple of weeks after reporting, which just means we’ll buy plenty of time with our option. Currently the shares are hovering near an all-time high just below the 46 level, which has been troublesome for the past week. We expect earnings to give JBHT the boost it needs to push past this barrier and break into uncharted territory.
J.B. Hunt Transport (NASDAQ: JBHT)
Sentiment is generally favorable toward JBHT, but not overly so. So while we don’t expect unwinding pessimism to be much of a factor, the stock is hardly vulnerable to high expectations among analysts, the shorts, or options players.
Despite high fuel prices, the trucking industry continues to benefit from the expanding economy. Plus, JBHT has been at the forefront of intermodal freight (containers that can be transported via rail, truck, or ship), which reduces fuel costs.
We recently closed out a successful call trade on trucker Con-Way (NYSE: CNW) in our Winning Edge service that returned a 75% profit in less than three weeks. We see JBHT following the same script. With a fundamental tail wind, modest earnings expectations, and a strong technical chart, we like JBHT over the intermediate term. Buy the JBHT May 45 Call for around $2.30 or so, which should allow ample time for the post-earnings strength to play out.
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