Surprising Picks for a Smooth Ride: Truckers

Sometimes the obvious leads one astray, and the unexpected leads one closer to the truth. The obvious is that the trucking industry is stuck in traffic, not going anywhere fast and isn't an industry you would want to take an investment ride on. But according to the analysis I do on my Web site, Validea.com, the trucking industry is the highest-ranked of all industries. That's the unexpected.

Why shouldn't the trucking industry be riding high? Higher fuel costs, for one thing. A driver shortage, for another. An iffy economy, for a third. Truck tonnage has been both up and down this year. And yet, trucking keeps heading the list of top industries.

Before I discuss specific trucking firms and the guru strategies that like them, let me make a few broad observations about the industry that run counter to what seems to be a common-sense case against investing in it. The industry seems to have absorbed higher fuel costs without being overwhelmed by pain.

Consumer spending is still strong, which keeps the need for truck shipments rolling. Further, the manufacturing sector (and manufacturers are big truck users) continues to hold its own. Truck tonnage has generally been on an upward tick the last four months, after faltering in the first quarter of this year. And then you have trucking company stocks, which tend to be reasonably priced.

The industry may seem to be struggling on the surface, but down below, there's a solid foundation on which to be positive about the big rigs.

Let's look at some of the trucking stocks the guru strategies I use think will keep on, well, truckin'.

One of the trucking companies favored by the guru strategies is Old Dominion Freight Lines (ODFL - commentary - Cramer's Take). The strategy I base on Peter Lynch's writings likes the stock's reasonable price-to-earnings ratio (17.14), strong growth rate (30.73%) and very desirable P/E/G ratio (P/E ratio relative to growth) of 0.56. A P/E/G of anything less than 1.0 is acceptable.

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At the time of publication, Reese was long Old Dominion Freight Lines and Con-way for client accounts, although holdings can change at any time.

John P. Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of the best selling book, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.

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