What drives the price of this trucking stock?
Paul Price wants you to consider stocks cheap.
“This is the second best time in more than 20 years to ‘position yourself small’ to ‘win big’,” Price wrote on Real Money recently. There are “incredible discounts now available on most small cap stocks compared to their mega-cap competition for your investment capital.”
What makes this market so strong? Part of this is due to the consolidation of large cap stocks. A growing segment of the market is occupied by a relative handful of stocks, with these companies gobbling up huge amounts of value. Tesla (TSLA) alone is worth over $ 1,033 per share at the time of writing, while Amazon’s (AMZN) share price is above $ 3,525.
These are incredible numbers if you made an early investment in either business. However, for ordinary investors looking for new investments, such prices can make large caps increasingly difficult to justify. It would cost a small fortune to buy a relative handful of stocks, and to earn even a small amount of money, a stock like Amazon has to fluctuate by hundreds of points.
Instead, Price recommends looking at stocks that can bring you much more value for lower prices and weaker price movements.
“I last wrote about the Heartland Express Trucking Company (HTLD) – Get the Heartland Express, Inc. back on September 20. Since then, the company has beaten its third quarter estimate by a dime. It paid a special dividend of 50 cents and increased the share buyback authorization by 3 million, for a total of 6.745 million shares. “
He added that “the company remains debt-free. As of September 30, it had $ 167.2 million in cash. This equated to approximately $ 2.07 per share outstanding.”
Additionally, “The trucking industry is booming. Supply chain disruptions allow truckers to have a lot of pricing power. My other industry pick, Knight-Swift Transportation KNX, has attracted a lot more love so far than Heartland. “
For Price, “That just leaves Heartland as better value, waiting for a similar pop to happen. I’m sticking to my previous price target of $ 24.20 as a minimum target. November of $ 16.40, that implies an upside potential of 47.5% plus dividends. ”
Price’s takeaway here is that “Heartland Express is a classic low-risk, high-return stock. Buy stocks, sell puts, or consider doing both.