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Is J B Hunt Transport Services Inc (JBHT) A Good Buy?

The economic recovery has really helped J B Hunt Transport Services Inc (NASDAQ:JBHT). The trucking company has been a growth machine since the Great Recession, with revenue increasing from $3.2 billion in 2009 to an over $6 billion in 2014. Due to rising asset utilization, J.B. Hunt Transport Services’ operating margin has increased from 7.7% in 2009 to 9.2% in 2010, 9.8% in 2011, 10.3% in 2013, and 10.2% in 2014. Shares of J.B. Hunt Transport Services have almost tripled in the same interval, rising from $30 per share in 2009 to $84 a share.

With the economy firing on all cylinders, there is every reason to believe that J.B. Hunt Transport Services’ growth will continue. Trucking demand is economically dependent. When consumers are confident, they buy more discretionary items from Amazon and other stores that require shipping. The increasing shipping demand increases trucking demand. Because the demand for trucking rises during an economic recovery, industry truck utilization has increased from 85% in 2010 to 95% in 2015. The demand for trucking should continue rising, with J. B. Hunt management expecting industry truck utilization to rise close to 100% by 2016. Because of the economically favorable tailwinds, analysts expect J. B. Hunt Transport Services’ earnings to increase by an average of 14.82% a year over the next 5 years.

Hedge funds have been bullish on J B Hunt Transport Services Inc (NASDAQ:JBHT). Nine out of J.B. Hunt’s top ten hedge fund holders either increased their positions or established new positions in the first quarter. Balyasny Asset Management, Scopus Asset Management, Park Presidio Capital, Dialectic Capital Management, and Point72 Asset Management all established new positions between January and March 31 while Crestwood Capital Management, Force Capital, Millennium Management, and Sandler Capital Management all increased their positions in the first quarter. The one hedge fund that decreased its position did so modestly. Sirios Capital Management decreased its position by just 7% to 167,765 shares.

We mention the activity of hedge funds because our research shows that following hedge funds can generate alpha. Our research shows that the 15 most popular small-cap stocks among hedge funds have outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012, and they managed to return more than 144% over the ensuing 2.5+ years and outperformed the S&P 500 Index by over 84 percentage points (read the details here).

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