It’s important for investors to realize that the pandemic’s impact won’t end with the deployment of an effective vaccine. Lots of things have changed since February. Many of those factors will never revert back to how the world worked in the pre-pandemic age. A great example is the explosive rise of the ecommerce trend.
The key to understanding why is about market penetration. While you may be used to shopping online and ordering everything delivered to your doorstep, that wasn’t typical for the vast majority of Americans. But the pandemic forced a shift whereby late adopters suddenly discovered the convenience of ecommerce and doorstep delivery by necessity for the first time. And now that they have, they won’t be returning to exclusive in-person brick-and-mortar consumption again.
As broad economic activity picks back up, it will do so in a world more dependent than ever on shipping, transportation, and logistics, which suggests stocks in the transports space could be primed for potential outperformance that shouldn’t be ignored.
With that in mind, we take a look at some of the most interesting names in the transportation and logistics space, including: Landstar System Inc. (NASDAQ:LSTR), Old Dominion Freight Line Inc. (NASDAQ:ODFL), Ultrack Systems Inc. (OTC:MJLB), and XPO Logistics Inc. (NYSE:XPO).
Landstar System Inc. (NASDAQ: LSTR) promulgates itself as a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation services to a broad range of customers utilizing a network of agents, third-party capacity providers and employees.
Landstar transportation services companies are certified to ISO 9001:2015 quality management system standards and RC14001:2015 environmental, health, safety and security management system standards.
Landstar System Inc. (NASDAQ: LSTR) recently reported revenue of $1.086 billion, an increase of approximately 7% over revenue of $1.012 billion reported in the 2019 third quarter. Diluted earnings per share of $1.61 in the 2020 third quarter represented an increase of approximately 19% over diluted earnings per share of $1.35 in the 2019 third quarter.
According to the release, 2020 third quarter diluted earnings per share was the second highest third quarter diluted earnings per share in the Company’s history, behind only the 2018 third quarter diluted earnings per share of $1.63. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $160.9 million in the 2020 third quarter, an increase of approximately 5% compared to $152.6 million in the 2019 third quarter. Operating margin, representing operating income divided by gross profit, was 51.2 percent in the 2020 third quarter.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 2% in that timeframe.
Landstar System Inc. (NASDAQ: LSTR) generated sales of $1.1B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 31.8% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($257.6M against $543.6M, respectively).
Old Dominion Freight Line Inc. (NASDAQ: ODFL) frames itself as a leading, less-than-truckload, union-free motor carrier providing regional, inter-regional and national LTL services through a single integrated organization. The company’s service offerings, which include expedited transportation, are provided through an expansive network of service centers located throughout the continental United States.
Through strategic alliances, the Company also provides LTL services throughout North America. In addition to its core LTL services, the Company offers a range of value-added services including container drayage, truckload brokerage and supply chain consulting.
Old Dominion Freight Line Inc. (NASDAQ: ODFL) most recently announced that, for an unprecedented eleventh consecutive year, Old Dominion Freight Line (OD) has earned the Mastio Quality Award for national less-than-truckload (LTL) carriers. The industry’s most comprehensive study ranked OD as the top carrier according to logistics professionals assessing carrier performance across 35 key attributes.
According to the release, Old Dominion’s premium service stood out from other national carriers in a quantitative ranking of attributes such as “Carrier is trustworthy,” “Shipments delivered when promised,” and “Drivers are courteous and professional.” Mastio & Company’s annual survey collects LTL shippers’ responses and identifies the importance of performance factors upon carrier choice.
And the stock has been acting well over recent days, up something like 4% in that time. Shares of the stock have powered higher over the past month, rallying roughly 9% in that time on strong overall action.
Old Dominion Freight Line Inc. (NASDAQ: ODFL) generated sales of $1.1B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 18.1% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($625.7M against $449.3M).
Ultrack Systems Inc. (OTC: MJLB) is certainly the most speculative name on this list, but may also hold the greatest potential for upside if discovered by the market. The company provides GPS tracking solutions through the development, implementation, and distribution of electronic monitoring and tracking systems for companies in leasing, transportation, construction, disposal, and many other service driven industries.
The Ultrack platform includes live tracking, reports, and alerts on a web-based platform. The company’s mission is to provide the best fleet tracking, reporting systems, and commitment to service.
Ultrack Systems Inc. (OTC: MJLB) most recently announced the acquisition and rebranding of Vexxar GPS Tracking, a successful company operating in the transportation industry that provides tracking solutions for drive-ends and trailers with refrigeration (reefer) controls. Ultrack originally acquired the client base of Vexxar on January 15, 2018. Unfortunately, the transaction was cancelled due to incompatible tracking platforms. As a result of Ultrack’s updated tracking platforms, the transaction was able to be revisited successfully. Vexxar’s assets and customer base have now officially been acquired by Ultrack.
According to the release, the company plans to rebrand Vexxar under the “BLIPTRACK” brand, which will be a division of Ultrack Systems. Management notes that this transaction represents a broad augmentation of the Company’s assets, customer base, and growth potential, which has already created the potential for a new strategic partnership with a separate entity. Details on this development will be announced in the near future.
“We are very excited to begin the strategic integration of a very valuable asset – one that has been on our radar for some time due to its significant synergies and value-add for our shareholders,” commented Ultrack CEO, Michael Marsbergen. “That value is already beginning to assert itself, with some exciting developments now within reach that should drive further advances and an overall expansion in our positioning as an emerging leader in the space.”
Ultrack Systems Inc. (OTC: MJLB) reported minor sales in its last quarterly financial data. However, its recent move to expand through strategic activity suggests that its commercial success could be at an important turning point that leads to more significant results.
XPO Logistics Inc. (NYSE: XPO) trumpets itself as a top ten global logistics provider of cutting-edge supply chain solutions to the most successful companies in the world.
The company operates as a highly integrated network of people, technology and physical assets in 30 countries, with 1,499 locations and approximately 97,000 employees. XPO uses its network to help more than 50,000 customers manage their goods most efficiently throughout their supply chains.
XPO Logistics Inc. (NYSE: XPO) most recently announced a companywide shoe drive to benefit the non-profit organization Soles4Souls. During the month of December, XPO employees will collect new or lightly used shoes to help Soles4Souls aid people living below the poverty line. The shoe drive expands on XPO’s support of Soles4Souls, following the company’s donations of supply chain services earlier this year.
“Today, on Giving Tuesday, we’re launching our December shoe drive to help Soles4Souls bring comfort to children and adults in need,” said LaQuenta Jacobs, XPO’s chief diversity officer. “We hope that everyone will celebrate this global day of generosity by making a difference in someone’s life through an act of kindness.”
And the stock has been acting well over recent days, up something like 10% in that time.
XPO Logistics Inc. (NYSE: XPO) generated sales of $4.2B, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 20.5% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($2B against $3.6B, respectively).
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