The skyrocketing demand for raw materials, auto parts, and other goods amid current supply chain interruptions is driving rising demand for trucking transportation. With the gradual economic recovery and increasing vaccination numbers, the demand for truck-based transit is expected to surge ahead of the holiday season.           

Furthermore, the electrification of trucks and the adoption of advanced technologies are expected to boost the trucking industry’s growth. According to a Research and Markets report, the global-local general freight trucking market is expected to grow at a 12% CAGR to $125.24 billion this year.

Given this backdrop, we think it could be wise to bet on fundamentally strong trucking stocks ArcBest Corporation (ARCB), P.A.M. Transportation Services, Inc. (PTSI), and Covenant Logistics Group, Inc. (CVLG).

ArcBest Corporation (ARCB)

ARCB is a leading logistics company with creative analytical people that delivers innovative solutions, including freight transportation and integrated logistics services. It operates through three segments: Asset-Based; ArcBest; and FleetNet. The company is based in Fort Smith, Ariz.

On September 29, 2021, ARCB announced an agreement to acquire MoLo Solutions, LLC, a Chicago-based truckload freight brokerage. With this acquisition, ARCB is set to be among the top 15 U.S. truckload brokers, with access to more than 70,000 carrier partners.

ARCB’s revenues increased 51.3% year-over-year to $948.97 million in the second quarter, ended June 30, 2021. Its operating income came in at $74.30 million, up 263.8% year-over-year. Its net income for the quarter was $60.98 million, up 284% year-over-year. Also, its EPS was $2.27, up 272.1% from the year-ago period.

Analysts expect ARCB’s revenue and EPS to increase 28.2% and 120.4%, respectively, year-over-year to $3.77 billion and $7.12 in the current year. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 80.3% in price to close Friday’s trading session at $85.46.

ARCB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

ARCB has an A grade for Growth, and a B grade for Value, Momentum, and Quality. Within the A-rated Trucking Freight industry, it is ranked #3 of 23 stocks. Click here to see the additional POWR Ratings for Sentiment and Stability for ARCB.

P.A.M. Transportation Services, Inc. (PTSI)

PTSI, through its subsidiaries, operates as a truckload transportation and logistics company across the United States, Mexico, and Canada. The Tontitown, Ark.-based company is involved in the transportation of general commodities, and currently operates a fleet of approximately 2,013 trucks.

On October 14, 2021, PTSI President Joe Vitiritto said, “We still have plenty of opportunity to continue to improve from here and our team will continue to press for profitable growth as we move through the rest of the year and into 2022. We also completed a 2-for-1 stock split and a successful Dutch Auction in the quarter generating additional benefit to our shareholders.”

For its fiscal third quarter, ended September 30, 2021, PTSI’s operating revenue increased 50.1% year-over-year to $183.09 million. The company’s operating income came in at $30.82 million, up 206% year-over-year. Also, its EPS was $1.87, representing a 259.6% year-over-year rise.

PTSI’s revenue is expected to be $557.8 million in its fiscal year 2021, representing a 14.6% year-over-year rise. The company’s EPS is expected to grow at 20% per annum over the next five years. Also, it surpassed the Street’s EPS estimates in three of its four trailing quarters. Over the past nine months, the stock has gained 91.2% in price to close Friday’s trading session at $54.50.

It’s no surprise that PTSI has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth, and a B grade for Value, Momentum, Sentiment, and Quality.

PTSI is ranked #1 in the Trucking Freight industry. Click here to see the additional POWR Rating for PTSI (Stability).

Covenant Logistics Group, Inc. (CVLG)

CVLG provides transportation and logistics services in the United States. It operates through four segments: Expedited; Dedicated; Managed Freight; and Warehousing. In addition, the Chattanooga, Tenn., company operates approximately 2,461 tractors and 5,647 trailers.

CVLG’s total revenue increased 33.7% year-over-year to $256.32 million for its fiscal second quarter, ended June 30, 2021. Its operating income came in at $18.33 million, versus a $28.95 million loss in the prior year’s quarter. Its net income was $15.42 million, compared to a $22.34 million loss in the year-ago period, while its EPS came in at $0.91 compared to a $1.31 loss per share in the prior year.

For its fiscal year 2021, CVLG’s revenue and EPS are expected to grow 19.6% and 228.7%, respectively, year-over-year to $1 billion and $3.55. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 60.8% in price to close Friday’s trading session at $32.62.

CVLG’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has an A grade for Growth, and a B grade for Value, Sentiment, and Momentum. CVLG is ranked #4 in the Trucking Freight. Click here to see CVLG’s ratings for Stability and Quality as well.

ARCB shares were trading at $86.44 per share on Monday morning, up $0.98 (+1.15%). Year-to-date, ARCB has gained 103.31%, versus a 20.69% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

More...