Sometimes it's tempting to just say “okay, valuation doesn't matter”,
throw caution to the wind, and go into a growth story like J.B. Hunt (Nasdaq:JBHT).
After all, with seemingly every quarter this company demonstrates why
it's one of the leaders in the still-growing intermodal space. While the
stock did lag the S&P 500 over the last quarter, it continues to
enjoy rich multiples and ample support on the sell-side. Even though I
really do like this company and wish I had bought the stock four years
ago, I still can't resolve the valuation in light of the probable
returns and cash flow that this business will produce.
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Showing posts with label Pacer. Show all posts
Showing posts with label Pacer. Show all posts
Monday, July 15, 2013
Thursday, July 19, 2012
Investopedia: Expectations, Not Performance, The Biggest Issue At J.B. Hunt
There's really not much a company can do when its stock takes on a
popularity above and beyond rationality, as very few CEOs are going to
come out and talk down their company's prospects. Nevertheless, fandom
can create its own problems, and the popularity of J.B. Hunt (Nasdaq:JBHT) as an organic growth
play in transportation and a great way to leverage the growth of
intermodal traffic has resulted in high expectations and an arguably
unsustainable valuation. Accordingly, I think there's a meaningful gap
between how well the company actually performed in the second quarter
and how the market has responded.
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Continue here:
http://stocks.investopedia.
Monday, February 14, 2011
Investopedia: Rail Traffic Data Still Largely Good News
Another month has gone by, but the data concerning rail traffic in the U.S. is still positive. That, in turn, is another positive read for the economy overall, as well as industrial and material companies. And of course, let us not forget the rail companies - so long as rail traffic continues to climb, that is a tailwind for the sector as well.
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January's Data Mostly Positive
For January of 2011, the Association of American Railroads reported that U.S. train carload traffic rose 8% from the year-ago level. The level of traffic seen in January also represented a 1.5% sequential increase from December's levels. Of the 20 categories tracked by the AAR, 15 saw carload growth in the month, with coal (always the biggest commodity for railroads) posting above-average growth of 8.8%. Grain traffic was also notably higher (up 10%), while sand, gravel, and aggregate shipments climbed 16%. The biggest laggards, waste/nonferrous scrap and nonmetallic minerals, were both down by double digits, but represent less than 3% of normal rail traffic anyway. (For more, see Rail Traffic Points To An Ongoing Recovery.)
Investors may want to pay attention to the "mostly positive" part of this news, though. For although U.S. rail traffic was again strong, U.S. intermodal traffic may be softening up. For January, intermodal traffic was up 7.4% on a year-on-year basis and 1.8% on a sequential basis. That is still quite good, but I believe this is the first quarter in quite some time where the year-on-year increase in rail traffic exceeded the increase in intermodal. It may mean nothing at all, or it may be a sign that international trade activity is lightening up a bit.
Also of note is the performance in Canada: Canadian traffic was down in January on an annual (-1.6%) and sequential (-5.9%) basis and although intermodal volumes were positive, they were not terribly strong. Seeing as how a lot of Canada's rail traffic is part of the "stuff trade" - mostly moving commodities to shipyards for export - this is worth watching as it pertains to commodity demand growth. If China and India are cutting down on the coal, lumber and metal they buy from Canada, that would not be positive for Canadian Pacific (NYSE:CPI) or Canadian National (NYSE:CNI), though both also have operators in the United States.
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Thursday, January 13, 2011
Investopedia: Rail Traffic Has A Strong End To A Rebounding Year
December may generally be a slower month for transports, but the recovery in rail traffic continued on through the last month of 2010. This continues what has been a relatively strong rebound from mid-2009, though the recovery has only recaptured about half of the former level of weekly carload traffic. Not only is this encouraging news for rail investors who continue to hang on to these relatively strong stocks, but it should be encouraging to any investors weighted towards economic recovery/expansion plays.
The December Data Continues The Trend
According to the Association of American Railroads' monthly Rail Time Indicators, U.S. rail traffic was up 9.4% in December of 2010, relative to the prior year. If that sounds like a strong result, it is - the pace of annual improvement had been slowing a bit, but December's result represents some reacceleration above the full-year 2009 growth of 7.3%. Growth was likewise strong in the intermodal market, as traffic here increased 13.3% on an annual basis.
Putting the data into a bit more context, the recovery is strong but still has a ways to go. Although December traffic finally surmounted the 2008 level, it was because the data finally annualized the steep declines that began in late 2008. Relative to 2007 and 2006, traffic is still down about 10-15% on a weekly basis. (For more, see Core Stocks For 2011.)
Details Matter
While there is still a sizable gap between today's traffic levels and the "normal" levels of 2006-2008, there is at least one reason to be skeptical that a strong recovery in traffic can continue. Traffic levels in cargo closely tied to the housing boom - forest products (lumber) and aggregates (gravel, cement, etc.) - have not really recovered much (though they have rebounded off a bottom) and there are no signs pointing to a quick turnaround. On the other hand, rail traffic in categories like chemicals and grain are much closer to pre-recession levels. (For more, see Rail Traffic Points To An Ongoing Recovery.)
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The December Data Continues The Trend
According to the Association of American Railroads' monthly Rail Time Indicators, U.S. rail traffic was up 9.4% in December of 2010, relative to the prior year. If that sounds like a strong result, it is - the pace of annual improvement had been slowing a bit, but December's result represents some reacceleration above the full-year 2009 growth of 7.3%. Growth was likewise strong in the intermodal market, as traffic here increased 13.3% on an annual basis.
Putting the data into a bit more context, the recovery is strong but still has a ways to go. Although December traffic finally surmounted the 2008 level, it was because the data finally annualized the steep declines that began in late 2008. Relative to 2007 and 2006, traffic is still down about 10-15% on a weekly basis. (For more, see Core Stocks For 2011.)
Details Matter
While there is still a sizable gap between today's traffic levels and the "normal" levels of 2006-2008, there is at least one reason to be skeptical that a strong recovery in traffic can continue. Traffic levels in cargo closely tied to the housing boom - forest products (lumber) and aggregates (gravel, cement, etc.) - have not really recovered much (though they have rebounded off a bottom) and there are no signs pointing to a quick turnaround. On the other hand, rail traffic in categories like chemicals and grain are much closer to pre-recession levels. (For more, see Rail Traffic Points To An Ongoing Recovery.)
Please click the link for the full article:
http://stocks.investopedia.
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