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Strategies & Market Trends : Value Investing

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To: Grommit who wrote (6007)	2/10/1999 12:29:00 PM
From: Q.	Read Replies (1) of 78516

Grommit, the trucking industry might be a good value now, but a cautious investor might avoid your picks XPRSA and TCAM. That's because they are highly leveraged, with debt/equity of 1.35 and 1.44 respectively, vs. an industry average of 0.6. Operating margins in this industry are typically 7.5%, which is slim enough that you can go from profit to loss too easily if you use a lot of leverage and something goes wrong. So that low p/e you are looking at should be evaluated along with the risk it faces. If you want to compare to an example of a trucking company with the best financial model, try the 6th largest co. by market cap: HTLD. Zero LTD and industry-leading operating margin of 17%. marketguide.com A funny thing about trucking companies is that you might think they should be cyclical, but there is also a counter-cyclical effect at play: when the economy is good, they can't get enough drivers and the top line suffers. This is HTLD's only problem at the moment.

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