Old Dominion Freight Line (NASDAQ:ODFL) started in North Carolina in 1934. It started running one 94-mile line between Richmond, VA and Norfolk, VA. Today, it’s a global shipping company with 20,000 employees and a nearly $13 billion market cap.
Needless to say, it has seen a few economic ups and downs over the years.
And right now, it’s part of the upswing, up 21% year to date, with plenty more to come.
ODFL specializes in less-than-truckload (LTL) shipping and logistics services, as well as supply chain services and warehousing.
By the 1970s, ODFL was expanding beyond the Southeast. By the ‘90s it was doing interregional service. And in the 2000s, it started household pickup and delivery services.
The point is, ODFL has changed with the times and made the right choices when it decided on a path forward, and it is this strength that has helped ODFL take advantage of this sector into the 21st Century.
The biggest opportunity for transport and logistics firms today is the rise of e-commerce. Leading market research firm Statista estimated that the e-commerce growth rate for 2017 was 24.8% and online retail sales comprised 10.2% of total retail sales. eMarketer projects that by 2020 e-commerce will make up 14.6% of retail spending.
That kind of growth directly affects ODFL, since all those goods have to be shipped from warehouses to homes and offices. And, since ODFL has built up a large number of warehouses, it will see growth in its transport and warehousing businesses.
And much of this growth is simply because more and more consumers are accepting e-commerce as a viable way to shop. This is the generic part of this major trend.
The cyclical part of this trend is the improving global economy. Over a century ago, colleagues of Charles Dow (inventor of Dow Jones averages, founder of The Wall Street Journal, etc) developed an investing concept called Dow Theory.
Basically, it followed the writings of Dow and six precepts he discussed about the markets. It is one of the first investing styles the market ever had, incorporating some technical elements with sector rotation.
The one key point here is, the relationship between the industrial stocks and the transport stocks. When the industrials are expanding, it is bullish for the transports and reflects and strengthening economy.
For example, if businesses and consumers are buying more, companies are building more and transportation services are expanding their services to get more goods to market to meet the increased demand.
This is still true today and that’s why ODFL is in prime position to take advantage.
It’s the merger of both the cyclical and the expanding e-commerce trend that will extend this growth much further into the economic cycle than in years past. Now is the time to get on this ride.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
