When you find an investment opportunity that looks too good, it pays to be cautious and recheck your assumptions. In the case of Knight-Swift Transportation (KNX), I understand the concerns of buying into a peaking trucking market, and maybe some concerns about forays outside the core trucking business, but even if the trucking market is soon to peak (and I’m not convinced it is), the shares don’t seem expensive even on cyclical multiples.
I think $57 to $63 looks like a pretty reasonable fair value range today, but I note the shares have struggled to break out above $50 and again there are those worries about a cyclical peak. As the shares can lose 30% to 50% of their value on peak-to-trough moves, that cyclicality issue is nothing to ignore, and investors may well decide that a 15% to 25% reward (over the near-term) isn’t worth that risk.
Read the full article here:
Knight-Swift Transportation Caught Between Demand And Supply, Cyclical Bulls And Bears
No comments:
Post a Comment