Remember the movie ”Smokey and the Bandit”?
It was released in 1977, and I spent the next couple of years chasing every girl who looked like Sally Field.
“Smokey and the Bandit” also popularized truck driving as a career.
In fact, two of my high school friends became long-haul truckers and drove 18-wheelers until they retired.
In my 20s, I went on a trip with one of them. I really enjoyed the first couple of days, but by day three … I was bored to death and ready to escape.
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Long-haul trucking isn’t as glamorous as Hollywood movies make it out to be. The hours are long, and the pay is decent … but not enough to get rich.
Company-employed truck drivers make $50,000–$80,000, and truck drivers who own their own rigs often make six-figure incomes. However, owner-operators are on the hook for all the expenses, including fuel and costly repairs.
As consumers, we tend to take the trucking industry for granted. For most of us, the only contact we have with a truck driver is when UPS (NYSE: UPS), FedEx (NYSE: FDX) or Amazon.com (Nasdaq: AMZN) delivers packages to our doorsteps.
But trucks are the connective tissue between factories and the stores and warehouses that stock their products.
Truckers travel a collective 450 billion miles every year … carrying 11 billion tons of merchandise, supplies and food to the stores where we shop.
- In fact, trucks are the linchpin of our economy, responsible for moving 72% of all the goods we consume. Every product that goes from an American port or factory to your doorstep rides on a truck at some point.
That’s why I pay careful attention to the Cass Freight Index, a measurement of the total freight shipped around North America.
It also includes rail, air and Mississippi River barge traffic … so it’s an extremely accurate representation of the freight transportation industry.
I also consider the Cass Freight Index to be a canary in the coal mine for the U.S. economy.
Forget about page views, unique users, likes, members and other social media nonsense. Our economy basically comes down to two things: (1) makers and (2) takers.
The economy revolves around the factories that produce goods we buy and the trucks, ships, trains and airplanes that bring those goods to us.
When the transportation industry is thriving, that means we are buying lots of the goods produced by American factories. And right now, the Cass Freight Index is telling us that the shipping industry is doing very, very well.
In fact, the pre-pandemic cost of shipping a container was about $1,300. In September 2021, that amount ballooned to $11,000.
As a result, truck transportation stocks are making small mountains of money. And there’s no shortage of options for freight companies with excellent Weiss Ratings.
Some of the top-rated names include:
- B. Hunt Transport Services (Nasdaq: JBHT, Rated “B”)
- Knight-Swift Transportation Holdings (NYSE: KNX, Rated “A”)
- Landstar System (Nasdaq: LSTR, Rated “B”)
- Old Dominion Freight Line (Nasdaq: ODFL, Rated “B+”)
- TFI International (NYSE: TFII, Rated “B-”)
Knight-Swift Transportation Holdings comes in as the top-rated among them. The company pays out a modest annual dividend of 0.7%, but it also pays a 10-cent- per-share quarterly distribution.
And according to The Wall Street Journal, the average price target for KNX is $67.25 with a high of $79. At the time of writing, shares are trading at $57.34.
Trucking isn’t as sexy as a whizbang Silicon Valley tech stock, but it could be one of the most profitable sectors of 2022 … and into 2023.
Sally Field, on the other hand, is in her 70s now and is as eye-catching as ever. I wonder if she’s single?
Best wishes,
Tony
