Today, Upside Editor Richard Moroney recommends a growth stock from the trucking industry.
“Roadrunner Transportation Systems, Inc. (RRTS) is our third recommendation in the trucking sector — a space we like for its solid fundamentals and growth outlook, partly reflecting an improving U.S. economy. The company offers freight delivery, logistics and transportation-management solutions. Unlike many truckers, Roadrunner uses mostly independent contractors that own or lease their own equipment — a business model that requires less investment in equipment and facilities, which enhances cash flow and return on assets. The stock earns an Overall score of 92, with a 95 for Momentum and 84 for Quality.
“Roadrunner focuses on small to midsize shippers — a market management calls expansive and under-served. The strategy paid dividends in 2012, as per-share earnings jumped 39% on a sales increase of 27%. For 2013, the per-share consensus is $1.40, up from $1.35 two months ago and above the $1.17 earned in 2012. Shares have rallied 27% this year but upside remains, as profit estimates could prove conservative. Roadrunner, capable of climbing another 15% to 20% this year, is being initiated as a Buy.”
- Richard J. Moroney, CFA, Upside, April 1, 2013