Top 5 Freight Companies To Own For 2015

You’ve probably never heard of Arch Therapeutics (ARTH.OB), but if the last month is any indication of what’s to come, you most likely will know the name by this time next year.

Biotech Breakout Stars

It seems that every year there is a number of biotech stocks that apparently come from nowhere to produce large annual gains. As fate would have it, these are often market laggards in the year prior. Then, all of a sudden, the perfect combination of catalysts, perhaps an oversold stock, and a little bit of hope leads to large gains.

To explain, check out a few examples:

Peregrine Pharmaceuticals (PPHM) traded from $2.40 to $0.93 in 2011. Then in 2012, the stock recovered rallying to highs over $5.00.

Threshold Pharmaceuticals (THLD) did virtually nothing in 2011, ending the year at $1.30, but then soared to over $9.00 the following year. In 2013, Inovio (INO) was similar, as it had been dead money for years, but then produced a one-year 485% gain in 2013.

Top 5 Freight Companies To Own For 2015: Forward Air Corp (FWRD)

Forward Air Corporation operates in two segments: Forward Air, Inc. (Forward Air) and Forward Air Solutions, Inc. (FASI). Through the Company’s Forward Air segment, it is a provider of time-definite surface transportation and related logistics services to the North American deferred air freight market. It offers its customers local pick-up and delivery (Forward Air Complete) and scheduled surface transportation of cargo. It transports cargo that must be delivered at a specific time but is less time-sensitive than traditional air freight. As of December 31, 2011, it operated its Forward Air segment through a network of terminals located on or near airports in 85 cities in the United States and Canada, including a central sorting facility in Columbus, Ohio and 12 regional hubs serving key markets. It also offers its customers an array of logistics and other services including expedited full truckload (TLX); dedicated fleets; warehousing; customs brokerage; and shipment conso lidation, deconsolidation and handling. During the year ended December 31, 2011, approximately 23.9% of the freight it handled was for overnight delivery, approximately 61.3% was for delivery within two to three days and the balance was for delivery in four or more days. Through its FASI segment, it provides pool distribution services throughout the Mid-Atlantic, Southeast, Midwest and Southwest continental United States. Pool distribution involves managing high-frequency, last mile handling and distribution of time-sensitive product to destinations in geographic regions. In March 2013, it acquired Total Quality, Inc. In February 2014, Forward Air Corporation acquired Central States Trucking Co. and Central States Logistics, Inc. from Central States Inc.

Forward Air

The Company receives freight from air freight forwarders, integrated air cargo carriers and passenger and cargo airlines at its terminals, which are located on or near airports in the U nited States and Canada. It also picks up freight from custo! mers at designated locations via our Forward Air Complete service. It transports these shipments by truck through its network to its terminals nearest the destinations of the shipments. It operates scheduled service to and from each of its terminals through its Columbus, Ohio central sorting facility or through one of its 12 regional hubs. It also operates scheduled shuttle service directly between terminals where the volume of freight warrants bypassing the Columbus, Ohio central sorting facility or a regional hub. When a shipment arrives at its terminal nearest its destination, the customer arranges for the shipment to be picked up and delivered to its final destination, or it, in the alternative, through its Forward Air Complete service, deliver the freight for the customer to its final destination. Its airport-to-airport network consists of terminals located in the 85 cities. As of December 31, 2011, independent agents and FASI operate 18 and two of its Forward Air locat ions.

The Company operates direct terminal-to-terminal services and regional overnight service between terminals where justified by freight volumes. It provides regional overnight service to the markets within its network. Direct shipments also reduce the likelihood of damage because of reduced handling and sorting of the freight. It operates regional hubs in Atlanta, Charlotte, Chicago, Dallas/Ft. Worth, Denver, Kansas City, Los Angeles, New Orleans, Newark, Newburgh, Orlando, and Sacramento. During 2011, the average weekly volume of freight moving through its network was approximately 34.0 million pounds per week. During 2011, its average shipment weighed approximately 717 pounds and shipment sizes ranged from small boxes weighing only a few pounds to large shipments of several thousand pounds.

The Company’s logistics and other services allow customers to access services from a single source: expedited full truckload (TLX); dedicated fleets; cu stoms brokerage, such as assistance with the United States C! ustoms an! d Border Protection (U.S. Customs) procedures for both import and export shipments; warehousing, dock and office space; drayage and intermodal; hotshot or ad-hoc ultra expedited services, and shipment consolidation and handling, such as shipment build-up and break-down and reconsolidation of air or ocean pallets or containers.

Forward Air Solutions

Through the Company’s FASI segment, it provides pool distribution services through a network of terminals and service locations in 19 cities throughout the Mid-Atlantic, Southeast, Midwest and Southwest continental United States. Pool distribution involves managing high-frequency handling and distribution of time-sensitive product to destinations in specific geographic regions. Its customers for this product are regional and nationwide distributors and retailers, such as mall, strip mall and outlet-based retail chains. Its pool distribution network consists of terminals and service locations in the 19 cities. Its Forward Air wholesale customer base is comprised of freight forwarders, integrated air cargo carriers and passenger and cargo airlines. Its air freight forwarder customers vary in size from independent, single facility companies to international logistics companies, such as SEKO Worldwide, AIT Worldwide Logistics, Expeditors International of Washington, Associated Global, UPS Supply Chain Solutions and Pilot Air Freight. Its FASI pool distribution customers are consisted of national and regional retailers and distributors, such as The Limited, The Marmaxx Group, The GAP, and Aeropostale. The Company also participates in air cargo and retail trade shows and advertise its services through direct mail programs and through the Internet via www.forwardair.com and www.forwardairsolutions.com.

Advisors’ Opinion:

  • [By Seth Jayson]

    Calling all cash flows
    When you are trying to buy the market’s best stocks, it’s worth checking up on your companies’ free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That’s what we do with this series. Today, we’re checking in on Forward Air (Nasdaq: FWRD  ) , whose recent revenue and earnings are plotted below.

Top 5 Freight Companies To Own For 2015: Heartland Express Inc (HTLD)

Heartland Express, Inc. (Heartland), incorporated on August 8, 1986, is a short-to-medium haul truckload carrier. The Company provides regional dry van truckload services through its regional terminals plus its corporate headquarters. The Company transports freight for shippers and generally earns revenue based on the number of miles per load delivered. The Company’s primary traffic lanes are between customer locations east of the Rocky Mountains. The Company is a holding company of Heartland Express Inc. of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc. and A & M Express, Inc. Heartland operates nine specialized regional distribution operations in Atlanta, Georgia; Carlisle, Pennsylvania; Chester, Virginia; Columbus, Ohio; Jacksonville, Florida; Kingsport, Tennessee; Olive Branch, Mississippi; Phoenix, Arizona, and Seagoville, Texas. The Company operates maintenance facilities at all regional distribution operating centers along wit h shop only locations in Fort Smith, Arkansas and O’Fallon, Missouri. In November 2013, Heartland Express Inc acquired 100% of the stock of Gordon Trucking, Inc.

The Company’s operations department is responsible for maintaining the continuity between the customer’s needs and Heartland’s ability to meet those needs by communicating customer’s expectations to the fleet management group. They are charged with development of customer relationships, ensuring service standards, coordinating proper freight-to-capacity balancing, trailer asset management, and daily tactical decisions pertaining to matching the customer demand with the appropriate capacity within geographical service areas. They assign orders to drivers based on well-defined criteria, such as driver safety and United States Department of Transportation (the DOT) compliance, customer needs and service requirements, on-time service, equipment utilization, driver time at home, operational effici ency, and equipment maintenance needs. Fleet management is r! esponsible for driver management and development. Their responsibilities include meeting the needs of the drivers within the standards that have been set by the organization and communicating the requirements of the customers to the drivers on each order to ensure successful execution. Serving the short-to-medium haul market (500 miles average length of haul in 2012) permits the Company to use primarily single, rather than team drivers and dispatch loads directly from origin to destination without an intermediate equipment change other than for driver scheduling purposes.

Advisors’ Opinion:

  • [By Ben Levisohn]

    Shares of Heartland Express (HTLD) rose today despite being cut by Stifel Nicolaus for valuation reasons.

    Bloomberg News

    Shares of Heartland Express have gained 50% this year, trumping the 38% rise in Con-Way (CNW) and the 29% advance in J.B. Hunt Transport Services (JBHT) but lagging Old Dominion Freight Lines (ODFL) and Swift Transportation (SWFT).

    That big gain was enough for Stifel’s John Larkin say no mas and cut his rating on Heartland Express. They explain why:

    Downgrading from Buy to Hold as the company’s shares appear fully and fairly valued. In fact, shares have recently traded through our 12-month fair value estimate of $19 (or 16.0x our 2015 EPS estimate of $1.15 plus ~$0.68 per share NPV of future cash tax benefits).

    Rating change is primarily valuation based as well as from our view that most transportation equities are trading ahead of the still mediocre underlying freight market fundamentals.

    BB&T’s Thomas Albrecht and team, who upgraded Heartland Express to Buy from Hold yesterday, explain why they think the stock will do just fine regardless of the economy:

    Heartland is an intriguing play upon both a slow-growth economy and a rapidly growing one (along with tight capacity). Many carriers are only able to thrive in the latter environment. With HTLD we believe that even in a sluggish economy it has a self-generating EPS story through the integration and growth of Gordon. Q3’13, a very difficult quarter for TL carriers, saw HTLD post a 79.3% OR versus 83.3%.

    The timing of the Gordon deal seems ideal, similar to the Great Coastal acquisition in mid-2002. Back then the TL market was stabilizing, but had yet to really take off, which occurred in the back half of 2003. Those 4-5 quarters allowed HTLD to assess customers, integrate operations, consolidate facilities and get ready for the next cycle. By the time that occurred HTLD was ready to take advantage of the capacity

  • [By Ben Levisohn]

    Heartland Express (HTLD) has dropped 2.2% to $19.12 after it was cut to Hold from Buy at Stifel Nicolaus.

    Allergan (AGN) was upgraded to Outperform from Market Perform at Wells Fargo.

Top 5 Freight Companies To Own For 2015: Con-way Inc (CNW)

Con-way Inc. (Con-way), incorporated in 1958, provides transportation, logistics and supply-chain management services for a wide range of manufacturing, industrial and retail customers. Con-way’s business units operate in regional and transcontinental less-than-truckload and full-truckload freight transportation, contract logistics and supply-chain management, multimodal freight brokerage, and trailer manufacturing. Con-way is divided into four segments: Freight, Logistics, Truckload, and Other. At December 31, 2011, Con-way Freight operated 286 freight service centers, of which 144 were owned and 142 were leased. At December 31, 2011, Con-way Freight owned and operated approximately 9,200 tractors and 26,400 trailers, including tractors held under capital lease agreements.

Freight

The Freight segment consists of the operating results of the Con-way Freight business unit. Con-way Freight is a less-than-truckload (LTL) motor carrier that utilize s a network of freight service centers to provide day-definite regional, inter-regional and transcontinental less-than-truckload freight services throughout North America. LTL carriers transport shipments from multiple shippers utilizing a network of freight service centers combined with a fleet of line-haul and pickup-and-delivery tractors and trailers. Freight is picked up from customers and consolidated for shipment at the originating service center. Freight is consolidated for transportation to the destination service centers or freight assembly centers. At Freight assembly centers, freight from various service centers can be reconsolidated for transportation to other freight assembly centers or destination service centers. From the destination service center, the freight is delivered to the customer. Typically, LTL shipments weigh between 100 and 15,000 pounds. In 2011, Con-way Freight’s average weight per shipment was 1,305 pounds.

Logistics

The Logistics segment consists of the operating results o! f the Menlo Worldwide Logistics business unit. Menlo Worldwide Logistics develops contract-logistics solutions, which can include managing complex distribution networks, and providing supply-chain engineering and consulting, and multimodal freight brokerage services. Menlo Worldwide Logistics’ supply-chain management offerings are primarily related to transportation-management and contract-warehousing services. Transportation management refers to the management of asset-based carriers and third-party transportation providers for customers’ inbound and outbound supply-chain needs through the use of logistics management systems to consolidate, book and track shipments. Contract warehousing refers to the optimization and operation of warehouses for customers using technology and warehouse-management systems to reduce inventory carrying costs and supply-chain cycle times. For several customers, contract-warehousing operations include light assembly or kitting operations.

Menlo Worldwide Logistics provides its services using a customer- or project-based approach when the supply-chain solution requires customer-specific transportation management, single-client warehouses, and/or single-customer technological solutions. However, Menlo Worldwide Logistics also utilizes a shared-resource, process-based approach that leverages a centralized transportation-management group, multi-client warehouses and technology to provide scalable solutions to multiple customers. Additionally, Menlo Worldwide Logistics segments its business based on customer type. At December 31, 2011, Menlo Worldwide Logistics operated 76 warehouses in North America, of which 55 were leased by Menlo Worldwide Logistics and 21 were leased or owned by clients of Menlo Worldwide Logistics. Outside of North America, Menlo Worldwide Logistics operated an additional 63 warehouses, of which 48 were leased by Menlo Worldwide Logistics and 15 were leased or owned by clients. Men lo Worldwide Logistics owns and operates a small fleet of tr! actors an! d trailers to support its operations, but primarily utilizes third-party transportation providers for the movement of customer shipments.

Truckload

The Truckload segment consists of the operating results of the Con-way Truckload business unit. Con-way Truckload is a full-truckload motor carrier that utilizes a fleet of tractors and trailers to provide short- and long-haul, asset-based transportation services throughout North America. Con-way Truckload provides dry-van transportation services to manufacturing, industrial and retail customers while using single drivers as well as two-person driver teams over long-haul routes, with each trailer containing only one customer’s goods. This origin-to-destination freight movement limits intermediate handling and is not dependent on the same network of locations utilized by LTL carriers. On average, Con-way Truckload transports shipments more than 800 miles from origin to destination. Under its regional s ervice offering, Con-way Truckload transports truckload shipments of less than 600 miles, including local-area service for truckload shipments of less than 100 miles.

Con-way Truckload offers through-trailer service into and out of Mexico through all major gateways in Texas, Arizona and California. For a shipment with an origin or destination in Mexico, Con-way Truckload provides transportation for the domestic portion of the freight move, and a Mexican carrier provides the pick-up, linehaul and delivery services within Mexico. At December 31, 2011, Con-way Truckload operated five owned terminals with bulk fuel, tractor and trailer parking, and in some cases, equipment maintenance and washing facilities. In addition, Con-way Truckload also utilizes various drop yards for temporary trailer storage throughout the United States. At December 31, 2011, Con-way Truckload owned and operated approximately 2,700 tractors and 8,000 trailers, including tractors held under capital lease agreements.

Other

! The Other! reporting segment consists of the operating results of Road Systems, a trailer manufacturer, and certain corporate activities for which the related income or expense has not been allocated to other reporting segments, including results related to corporate re-insurance activities and corporate properties. Road Systems primarily manufactures and refurbishes trailers for Con-way Freight and Con-way Truckload.

Advisors’ Opinion:

  • [By John Kell]

    Con-way Inc.(CNW) issued a weaker-than-expected profit outlook for the fourth quarter after the trucking company encountered challenges at its Con-way Freight and Menlo Worldwide Logistics operations. The company’s shares declined 6.1% to $38.89 premarket.

  • [By Ben Levisohn]

    Shares of Atlas Air have plunged 15% to $37.13 today at 1:48 p.m., on what has been a lousy day for shippers and those involved with shipping. Trucking company Con-Way (CNW) has fallen 2.5% to $40.38 after it said earnings would be unchanged from a year ago, well short of analyst forecasts. FedEx (FDX) has dropped 0.7% following UPS’s miss.

Top 5 Freight Companies To Own For 2015: Werner Enterprises Inc (WERN)

Werner Enterprises, Inc., incorporated on September 14, 1982, is a transportation and logistics company engaged primarily in hauling truckload shipments of general commodities in both interstate and intrastate commerce. The Company also provides logistics services through its value added services (VAS) division. As of the year ended December 31, 2012, the Company had a fleet of 7,150 trucks, of which 6,505 were Company-operated and 645 were owned and operated by independent contractors. The Company operates in two segments: Truckload Transportation Services (Truckload) and VAS.

Truckload segment

The Company’s Truckload segment consists of the One-Way Truckload and Specialized Services units. One-Way Truckload includes the operating fleets: the regional short-haul (Regional) fleet transports a variety of consumer nondurable products and other commodities in truckload quantities within geographic regions across the United States using dry van trai lers; the medium-to-long-haul van (Van) fleet provides comparable truckload van service over irregular routes, and the expedited (Expedited) fleet provides time-sensitive truckload services utilizing driver teams.

Specialized Services provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, including services for products requiring specialized trailers such as flatbed or temperature-controlled trailers. The Company’s Truckload fleets operate throughout the 48 contiguous United States, both common and contract, granted by the United States Department of Transportation (DOT). The Company also has authority to operate in several provinces of Canada and to provide through-trailer service into and out of Mexico. The principal types of freight the Company transports include retail store merchandise, consumer products, grocery products and manufactured products. The Company focuses on transport ing consumer nondurable products that generally ship.

!

VAS segment

The Company’s VAS segment is a non-asset-based transportation and logistics provider. VAS is consists of four operating units that provide non-trucking services to the Company’s customers: truck brokerage (Brokerage) uses contracted carriers to complete customer shipments; freight management (Freight Management) offers a range of single-source logistics management services and solutions; the intermodal (Intermodal) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation, and Werner Global Logistics international (WGL) provides complete management of global shipments from origin to destination using a combination of air, ocean, truck and rail transportation modes. The Company’s Brokerage unit had transportation services contracts with approximately 9,400 carriers as of December 31, 2012.

Advisors’ Opinion:

  • [By Mike Deane]

    Werner Enterprises (WERN) announced its third quarter earnings after the bell on Thursday, posting a 1% change in revenues from last year’s Q3, but a 15% drop in net income.

    The Omaha, NE-based logistics and transportation company announced Q3 revenue of $511.73 million, which was up slightly from last year’s $506.50 million revenue figure. WERN reported net income for the quarter of $21.53 million, or 29 cents per diluted share, which was down from last year’s Q3 earnings of $25.13 million, or 34 cents per diluted share.

    The company was able to meet analyst views of 29 cents EPS, and slightly surpass the revenue estimate of $503.82 million.

    WERN shares were up 21 cents, or 0.90%, at Thursday’s market close, but were edging lower in after-hours trading. YTD, the company’s stock is up just over 4%.

  • [By Monica Gerson]

    Werner Enterprises (NASDAQ: WERN) is expected to post its Q3 earnings at $0.29 per share on revenue of $503.82 million.

    Chipotle Mexican Grill (NYSE: CMG) is estimated to post its Q3 earnings at $2.78 per share on revenue of $820.28 million.

Top 5 Freight Companies To Own For 2015: Vitran Corporation Inc (VTNC)

Vitran Corporation Inc. (Vitran), incorporated on April 29, 1981, is a provider of freight surface transportation and related supply chain services throughout Canada 34 states in the eastern, southeastern, central, southwestern, and western United States. The Company’s business consists of Less-than-truckload services (LTL). These services are provided by stand-alone business units within their respective regions. Vitran’s business is carried on through its subsidiaries, which hold the licenses and permits required to carry on business. As of December 31, 2012, Vitran’s principal wholly owned operating subsidiaries included Vitran Express Canada Inc. (Ontario), Can-Am Logistics Inc. (Ontario), Vitran Logistics Ltd. (Ontario), Expediteur T.W. Ltee (Canada), Vitran Corporation (Nevada), Vitran Express Inc. (Pennsylvania), Vitran Logistics Corp. (Delaware), Vitran Logistics Inc. (Indiana), and Las Vegas/L.A. Express, Inc. (California). In March 2013, Vitran Corp Inc com pleted divestiture of its Supply Chain Operation division to Legacy Supply Chain. In October 2013, Vitran Corporation Inc. completed the sale of its United States LTL business.

LTL Services

Within Canada, the Company provides next-day service within Ontario, Quebec and parts of western Canada, and generates its revenue from the movement of LTL freight within the three- to five-day east-west service lanes. The majority of its trans-Canada freight is shipped intermodally, whereby the Company’s containers are loaded onto rail cars and trans-loaded to Vitran facilities where Vitran’s network of owner operators pick up and deliver the freight to various destinations. During 2012, Vitran’s Canadian LTL business represented approximately 27.6% of total LTL revenues. Vitran’s Transborder Service Solution (inter-regional) provides over-the-road service between its Canadian LTL and United States LTL business units.

Advisors’ Opinion:

  • [By Monica Gerson]

    Breaking news

    Vitran Corporation (NASDAQ: VTNC) announced today that it has entered into a definitive arrangement agreement with TransForce pursuant to which TransForce has agreed to acquire all of the outstanding common shares of Vitran not already owned by TransForce for US$6.50 in cash per share, in accordance with TransForce’s prior proposal. To read the full news, click here. ReneSola (NYSE: SOL) today announced it signed a Memorandum of Intent (MOI) to sell three utility-scale projects in Western China, with a total capacity of 60MW, to Jiangsu Akcome Solar Science & Technology Co on December 30, 2013. To read the full news, click here. Cooper Tire & Rubber Company (NYSE: CTB) today announced it has terminated the merger agreement with Apollo Tyres (NSE:ApolloTYRE). To read the full news, click here. RedHill Biopharma (NASDAQ: RDHL) today announced that it has entered into a definitive agreement with leading healthcare investor OrbiMed Israel Partners Limited Partnership, an affiliate of OrbiMed Advisors LLC, for the sale of RedHill’s American Depository Shares and warrants in a private placement transactionor a total sum of $6.0 million. To read the full news, click here.

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