While they seldom get a lot of attention, investors shouldn’t ignore trucking companies and trucking stocks.
Trucking services, and the companies behind them, were thrown into the media spotlight recently. A convoy of truckers in Canada protesting vaccine mandates and pandemic lockdown restrictions used their semi and transport trucks to blockade the Ambassador Bridge that serves as a critical trade corridor between Detroit and Windsor, Ontario. They also jammed Canada’s capital city of Ottawa.
The blockades, notably the one at the border crossing with Michigan, reminded people just how important the trucking and ground transportation industries remain to the North American economy. It is estimated that more about $325 million worth of goods cross the Windsor-Detroit border each day via the Ambassador Bridge, proving to be a vital trade link between the U.S. and Canada.
Now convoys are reportedly on their way to Washington, D.C. With the value of truck transportation in the spotlight, here are three trucking stocks for investors to consider:
- J.B. Hunt Transport Services (NASDAQ:JBHT)
- Old Dominion Freight Line (NASDAQ:ODFL)
- Knight-Swift Transportation (NYSE:KNX)
Trucking Stocks: J.B. Hunt Transport Services (JBHT)
J.B. Hunt has been a going concern since 1961. Today, the Lowell, Arkansas-based company employs nearly 30,000 people, operates a fleet of more than 12,000 trucks, and boasts annual revenues of nearly $10 billion.
J.B. Hunt has been publicly traded since 1983 and its stock continues to go the distance for shareholders. In the past 12 months, JBHT stock has gained 33%. Over the past five years, the company’s stock has gained 101%, bringing its all-time growth to nearly 12,000%.
While the share price appreciation alone is reason enough to buy JBHT stock, the company also offers a lucrative dividend payment that it grows on a regular basis. In January of this year, J.B. Hunt announced that it is raising its quarterly dividend by 33% to 40 cents per share, or $1.60 annually. The January increase came after the company raised its dividend twice in 2021.
Plus, J.B. Hunt is active in terms of buybacks of its own stock. In 2021, the company repurchased $150 million worth of shares, and it still has $350 million remaining under its current share repurchase program. This is a trucking company that delivers for shareholders.
Old Dominion Freight Line (ODFL)
Another trucking company that has delivered strong returns to shareholders is Thomasville, North Carolina-based Old Dominion Freight Line. In business since 1934, Old Dominion offers traditional truck transport services, as well as logistics and household moving options.
The company is global in scope, providing service to Europe, Asia and South America, as well as throughout the U.S. Old Dominion employs nearly 20,000 people, runs 10,000 trucks, and has annual revenues of more than half a billion dollars. It’s logistics and shipping businesses have boomed in recent years as demand spiked during the pandemic.
ODFL stock has responded. Over the past 12 months, the company’s share price has increased 37%. As with J.B. Hunt, shares of Old Dominion have remained steady during the recent market volatility, having grown 6% as the S&P 500 index lost 3%.
Analysts expect Old Dominion Freight Line to continue outperforming the broader market even in today’s high inflation environment when fuel costs are at their highest level since 2014. The reason is that Old Dominion has strong pricing power and a loyal customer base. Expect more returns.
Trucking Stocks: Knight-Swift Transportation (KNX)
Phoenix, Arizona-based Knight-Swift Transportation is the fifth-largest trucking company in the U.S. today, with more than 25,000 employees, 18,000 trucks, and more than $2 billion in annual revenue.
Formed by a 2017 merger of Knight Transportation and Swift Transportation, the combined company today offers refrigerated truckload services in addition to its traditional dry truck operations. The refrigeration allows Knight-Swift to transport a variety of commodities and fresh produce across the U.S. And while KNX stock has performed strongly over the past year, analysts see further upside ahead.
In the last year, KNX stock has gained 21%. Yet despite the market outperformance, Wall Street remains bullish on Knight-Swift Transportation. The median price target on the stock is currently $66.50, implying further upside of 23%.
In addition to the share price growth, Knight-Swift also rewards shareholders with its dividend payout. In earlier February this year, the company announced a 20% increase to its dividend to 12 cents per share or 48 cents per share annually. This comes after Knight-Swift last raised its dividend in April 2021 by 25%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
