J.B. Hunt Transport Services, Inc. (JBHT), Landstar System, Inc. (LSTR), Old Dominion Freight Line (ODFL): How Should You Trade These Trucking Stocks?

Old Dominion Freight Line (NASDAQ:ODFL) has invested about $620 million in its network expansion since 2006, but its real estate investment will likely slowdown in the near future. The company will spend $95 million on real estate in 2013. At present, the company has 220 service centers and plans to open an additional 30-35 service centers near its existing facilities. This helps generate strong returns from these service centers because of low fixed costs. With low real estate investments going forward and higher returns from its service centers, the company will generate $70 million in free cash flow in 2013 and around $160 million next year. This creates potential for shareholder returns in the form of dividends or share repurchases.

Conclusion

Increased number of containers and revenue per load will drive J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)’s intermodal segment’s revenue in 2013. Meanwhile, Old Dominion Freight Line (NASDAQ:ODFL)’s tonnage growth is expected to result in higher revenue in the second quarter of 2013. Additional service centers and the expected slowdown in real estate investment will generate free cash flows in 2013 that will create potential for capital returns to its shareholders. Both of these stocks are a “buy.”

Landstar System, Inc. (NASDAQ:LSTR) is facing the one-two punch of declining truckload volume and revenue per load. Its revenue will be lower in the second quarter of 2013 despite its addition of more agents to its force. This stock is a “hold.”

Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article How Should You Trade These Trucking Stocks? originally appeared on Fool.com and is written by Madhukar Dubey.

Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.