Monday, November 06, 2006

Hit #126 (Swift)

Swift Transportation (SWFT), the trucking company, got a cash buyout offer worth $2.2 billion from its former CEO, Jerry Moyes. The offer, of $29/share, represents a gain of 68% over my average cost of $17.29/share.

Investors seem to be expecting a higher bid, as the stock is trading closer to $30!

Jerry Moyes was also behind the offer for another trucking company Central Freight Lines, which featured as Hit #78.

I had mentioned trucking as a very attractively valued sector earlier. At this point, most trucking companies are fairly valued or overvalued, and I would recommend caution while opening new positions.

While smaller truckers have become expensive, some of the larger ones have become cheaper in recent weeks. Yellow Roadways (YRCW), Forward Air (FWRD), J.B Hunt (JBHT) and Old Dominion Freight Lines (ODFL), all are worth nibbling at. I had mentioned a few of them on a post covering an earlier Arizona trip.

There is still a lot of consolidation to be had in this sector. Quality Distribution (QLTY) and Sirva (SIR) are speculative bets for the brave, while Marten (MRTN) and Frozen Food Express (FFEX) are specialty truckers that are a good fit for the regular truckers.

Also, like with UPS earlier, traditional delivery services providers will be looking to get into express and less-than-truckload sectors.

Previous hit - Per-Se (#125)


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