Trade of the Day: Covenant Transportation Group, Inc. (CVTI)

As unemployment drifts lower, corporate tax cuts give companies the confidence to spend and grow, and stifling regulations get rolled back. I project this economy is about to hit peak stride. And transportation stocks could see a lot of upside over the next 1 to 3 years.

If your goal is steady market beating returns. The major transportation names are worth a look. If on the other hand, your goal is outsized returns, you need to look a little harder. Which is what my service, Ultimate Growth, specializes in. And we’ve locked onto a winner in Covenant Transportation Group, Inc. (NASDAQ:CVTI).

For more than 25 years, this company has provided freight transportation and logistics services from its headquarters in Chattanooga, Tennessee. The company provides regional delivery and long-haul delivery, as well as refrigerated trucking. And these services are offered through six main businesses: Covenant Transport, Southern Refrigerated Transport, Star Transportation, Covenant Transport Solutions, Transport Financial Solutions and Transport Enterprise Leasing.

Here’s the tale of the tape. Beginning with the chart going back to the beginning of 2017:

Trade of the Day: Covenant Transportation Group, Inc. (NASDAQ:CVTI)

Headquarters: Chattanooga, TN


Market Cap: 559.63M

52-Week: $15.86 – 33.36

EPS: 3.02

Buy Below: $36

Last quarter, CVTI beat year-over-year earnings by 724%. And this small-cap company — it’s valued at just $589 million as I write — has plenty of room to continue this impressive growth.

Shares of CVTI jumped more than 20% after the company provided first-quarter guidance. Company management noted that Covenant Transportation Group has been operating in a very favorable environment this year, and operating results for the first quarter, so far, are exceeding their own expectations.

During January and February, Covenant Transportation Group saw a 6.3% increase in average freight revenue per tractor and a 9.2% jump in average freight revenue per mile. Only average miles per tractor slipped 2.6% over this time. And March has had similar results, so far.

As a result, Covenant Transportation Group now expects first-quarter earnings per share between $0.17 and $0.23, up sharply from the first quarter of 2017. And keep in mind, these are the same analysts who have underestimated CVTI’s earnings for three of the last four quarters.

In light of this updated guidance, analysts have revised first-quarter earnings per share estimates 28.6% higher in the past week alone. CVTI is a buy under $36.

Now, as I mentioned, I believe this economy will hit peak stride over the next 1 to 3 years. And according to my calculations, stock market share prices are being outpaced by earnings growth.

Meaning the stock market could absolutely soar over the next 1-3 years. In fact, I think this could be the biggest opportunity I’ve seen in my 35+ year career.

That’s why I’m going to suspend business as usual for a short while tomorrow morning. And provide you a complete rundown on my outlook via special presentation.

You can sign up to receive it by clicking here.

Louis Navellier is a renowned growth investor and the editor of Blue Chip Growth, Emerging Growth and Ultimate Growth. He uses a combination of quantitative and fundamental analysis to identify today’s best stocks that are delivering market-beating capital appreciation. For more information about Louis, his market beating strategies and to get an invitation to his live presentation tomorrow morning, click here.

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