In today’s America, it seems one cannot drive long distances or even take a weekend road trip without encountering a large number of semis. This speaks to the dependence of our logistics systems on trucking, particularly since the implementation of the North American Free Trade Agreement (NAFTA). Despite the size of the industry, however, investors can still enjoy considerable opportunity in trucking stocks.
The trucking industry remains highly fragmented. About 110,000 carriers and around 350,000 independent operators make up this $200 billion industry. So splintered is the industry that the top 50 companies make up less than 30% of the market.
With a large number of operators, few trucking companies enjoy the protection of a competitive moat. However, larger companies can gain competitive advantages through relationships, bulk fuel pricing, larger fleets and access to drivers, which remain in short supply. These are those stocks.
The following trucking stocks exhibit considerable growth and have also maintained reasonable price-earnings (P/E) ratios. Those interested in the following the trucking industry for high-growth stocks should consider the following three:
High-Growth Trucking Stocks: Arcbest Corp (ARCB)
Arcbest Corp (NASDAQ:ARCB) acts as a specialty logistics provider. The firm specializes in less-than-truckload (LTL) services, expedited solutions, moving for households, and roadside assistance. ARCB takes a more holistic approach than other trucking stocks. The Fort Smith, Arkansas-based company also offers transport by air or sea as well as warehousing.
ARCH has grown to a market cap of just over $1.2 billion, and growth keeps ramping up. After seeing profits drop in 2016, they rebounded sharply in 2017. Analysts predict the company will earn $2.82 in fiscal 2018. This places its forward PE at around 17. They expect profit growth rates of about 9% in both fiscal 2019 and 2020.
The price on ARCB stock has also seen impressive growth. After seeing a low of $19 per share one year ago, the stock saw a steady move upward. The move became especially profound after the company’s first-quarter earnings report. Q1 earnings of 29 cents per share beat earnings per share (EPS) expectations by 36 cents. Revenue also exceeded expectations. Today, the stock trades at almost $47 per share.
Despite the near-150% growth in the ARCB stock price over the last year, valuations remain such that room for growth remains. Also, with nearly double-digit earnings growth and the ability to ship almost anything by any transport mode, ARCB has become well-positioned to serve customers and stockholders alike.
High-Growth Trucking Stocks: Schneider National Inc (SNDR)
Schneider National Inc (NYSE:SNDR) ranks as one of the largest full-truckload companies in the country. The Green Bay, Wisconsin-based operator has served customers for more than 80 years. It offers a wide array of logistics and transport services including last-mile services, warehousing and brokerage services within its industry.
Schneider has recently seen a substantial increase in revenue growth as the company recovers from losses sustained in 2016. Analysts also expect SNDR to earn $1.46 per share this year. That takes the forward P/E to just over 20. This makes SNDR stock slightly more expensive than some of its peers. However, Wall Street expects profit growth to remain well in the double-digits for at least the next two years.
With its long history and deep networks, it remains one of the more stable trucking stocks. However, for most of its history, it remained a private company. Schneider launched its IPO in April 2017. SNDR stock has risen steadily since. It was already one of the larger trucking companies trading on the stock market at the time of its IPO.
Today, it supports a market capitalization of over $5.2 billion. Considering its growth rate, its size and its deep networks, SNDR stock should remain one of the better opportunities in the trucking industry.
High-Growth Trucking Stocks: USA Truck, Inc. (USAK)
USA Truck, Inc. (NASDAQ:USAK) transports commodities throughout the continental United States. It also offers limited services into and out of Canada and Mexico. The Van Buren, Arkansas-based trucking firm finds itself in growth mode yet again. After seeing large drops in revenue in 2015 and 2016, the company has again placed itself on a growth trajectory.
Earnings turned positive in 2017 following a loss in 2016. Consensus earnings for 2018 stand at $1.38 per share. This places the forward P/E ratio at about 17. They predict this number will grow to $2.29 per share in 2019, a 66% year-over-year growth rate.
The market has responded positively. Trading as low as $6.06 a year ago, the stock price reached over $29 per share earlier this year. Today, it trades at under $24 per share. Despite this growth, the stock still maintains a market cap under $200 million. Also, the recent drop in the stock price creates a buying opportunity for would-be investors.
With the small size and high-growth rate, especially compared to other trucking stocks, investors still have time to enjoy the growth beginning to emerge from USAK stock.
As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.