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What Makes Price Pick This Trucking Stock?

To get big returns, look to small stocks, Real Money's Paul Price argues.
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Paul Price wants you to consider low-priced stocks. 

“This is the second best time in over 20 years to be ‘positioning small’ to ‘win big,’” Price wrote recently on Real Money. There are “incredible discounts now available on most small-cap stocks versus their mega-cap competition for your investment capital.”

What makes this market so strong? In part it has to do with the consolidation of large-cap stocks. An increasingly large segment of the market is occupied by a relative handful of stocks, with those firms gobbling up enormous amounts of value. Tesla (TSLA) alone is worth more than $1,033 per share at time of writing, while Amazon’s (AMZN) stock price is over $3,525.

These are unbelievable numbers if you invested in either company early. However, for ordinary investors looking for new investments, prices like this can make large-caps increasingly difficult to justify. It would cost a small fortune to buy a relative handful of shares, and to make even a small amount of money a stock like Amazon needs to fluctuate by hundreds of points.

Instead, Price recommends looking at stocks that can get you much more value for lower prices and smaller price movements.

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“I last wrote about trucking firm Heartland Express  (HTLD) - Get Heartland Express, Inc. Report  back on Sep. 20. Since then, the company beat its third-quarter estimate by a penny. It paid a special dividend of 50 cents and increased the share buyback authorization by 3 million, to a total of 6.745 million shares."

He added that "The company remains debt-free. As of Sep. 30, it held $167.2 million in Treasury cash. That equaled about $2.07 per outstanding share."

In addition, c"The trucking industry is booming. Supply chain disruptions allow truckers plenty of pricing power. My other industry pick Knight-Swift Transportation KNX has drawn a lot more love so far than Heartland."

For Price, "That just leaves Heartland as a better value, waiting for a similar pop to occur. I'm sticking with my previous target price of $24.20 as a minimum goal. From its Nov. 4 quote of $16.40 that implies upside potential of 47.5% plus dividends.”

Price’s takeaway here is that “Heartland Express is a classic low-risk, high potential return stock. Buy some shares, sell some puts or consider doing both.”

Get more trading strategies and investing insights from the contributors on Real Money.