Big Rigs and RVs

11/20/2020 5:00 am EST


Steve Reitmeister


My goal is to be invested in growth stocks trading at attractive valuations, asserts Steve Reitmeister, editor of Reitmeister Total Return. Here, he looks at two new additions to his trading portfolio — both transportation sector ideas.

A rebounding economy is always good news for transportation companies as more products will be shipped around the country.

Thus, makes perfect sense to climb aboard Knight-Swift (KNX) — a big rig firm with one of the best long term track records of success.

The truckload carrier is coming off a stellar 23% earnings beat in the past quarter that has earnings estimates pushing well higher into 2021.

Because of that the average target on the firm stands at nearly $52 when shares are trading at only $42. That is a healthy value proposition at this time.

However, if they keep rolling out big beats as they have done of late, then estimates and value will press even higher. So it would not shock me to see KNX test $60 in the coming year.

Thor Industries (THO) is one of the largest makers of recreational vehicles (RVs) including leading brands like Jayco and Airstream.

As you might already know the camping industry was one of the benefactors of the coronavirus as more people saw the escape to the outdoors as one of the few ways to find travel with the virus in our midst.

In fact, at least once a week my wife brings up her desire to buy an Airstream Atlas which is an obscenely expensive RV.

The good news here is that the trends for the industry were quite positive beforehand and should be strong afterwards as well. Thus, this is not a bet on the virus growing. Rather a stock that performs well even with the virus still an ongoing concern.

Their most recent 59% earnings beat came with news of truly impressive order backlogs. This led to soaring earnings estimates which investors have not fully appreciated. That's why shares are trading in the low $90's while the average target is $117.

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