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Buy TravelCenters as the Economy Improves

NEW YORK ( TheStreet) -- When traveling between Tampa Bay and the New York City area my wife and I take the Eisenhower Interstate System as well as one of the old roads used before the Interstate, Route 301. When looking for an exit to refuel both our 2004 Town Car and ourselves we often use the TravelCenters of America (TA - Get Report) facilities. They are kept clean and cater to the trucking industry, but welcome all travelers.

We left Florida Monday morning at 5:30 a.m. and entered I-75 via exit 52 after about 10 miles of driving on local rural roads. We exited the Interstate in Ocala and drove a couple of miles east to pickup Route 301 traveling north until we got to I-10 towards Jacksonville. Just before this intersection there's a Pilot and a TA center, which is always one of our pit-stops. When we made this trip during the same time on June 10 the TA was not busy. But on this week's trip is was. I knew then that on the trip north we would be accompanied by at least twice as many trucks as in June.

Back on Aug. 6, TravelCenters reported its quarterly results and missed by a mammoth 43 cents, earning 54 cents a share. The stock dropped like a rock from its Aug. 5 close at $11.70 to its 200-day simple moving average, then at $8.20. Since then the stock has continued to slide to a new post-earnings low at $7.54, as of Wednesday. (It is currently at $7.65.) The stock's decline was enough for two upgrades since Aug. 5, and today the stock is rated strong buy, according to ValuEngine.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12007604/1/kass-10-reasons-the-market-has-peaked.html"><em>Kass: 10 Reasons the Market Has Peaked</em></a>]

TravelCenters is in the retail-wholesale sector, has a 12-month forward P/E ratio of just 7.8, and is trading at 67% of its book value. The ValuEngine one-year price target is $8.93, which would be a gain of 18%. My semiannual value level is $7.18 with a semiannual pivot, now a risky level at $9.32.

Continuing north on I-95, many trucks were still off the road at the rest areas, but many were also on the road and occasionally we got behind a convoy of four or five trucks.
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