The Wall Street Transcript Publishes Special Trucking Industry Report

1 March 2000
The Wall Street Transcript Publishes Special Trucking Industry Report
    NEW YORK, Feb. 29 -- Thom Albrecht, Vice President with ABN
AMRO, Paul Jeanne, Equity Analyst with Deutsche Banc Alex.Brown, and Jeffrey
Kauffman, First Vice President with Merrill Lynch, examine the outlook for the
Trucking Industry in this timely and deeply informative 14,500-word roundtable
discussion from The Wall Street Transcript (212-952-7433) or
http://www.twst.com/info55.htm
    In a vital review of this evolving sector for investors and industry
professionals, this Trucking Industry Report features an in-depth analysis of
the Trucking Industry sector by leading experts Thom Albrecht, Vice President
with ABN AMRO, Paul Jeanne, Equity Analyst with Deutsche Banc Alex. Brown, and
Jeffrey Kauffman, First Vice President with Merrill Lynch & Co.
    Albrecht, Jeanne, and Kauffman discuss the outlook for the trucking
industry, including the favorable conjuncture for the trucking companies and
offer their current stock recommendations.
    On the truckload side, Kauffman states: "The interesting stock to us there
is J.B. Hunt , which is a stock that a lot of people kind of left
for dead. Hunt is kind of a different character in truckload. They are not
really a pure truckload company. They have a large investment in intermodal
containers and they have some dedicated logistics businesses that are growing
very, very fast and improving profitability.  They are heavily contingent upon
rail service, and when rail service is bad, it kills earnings.  But when rail
service was good a few years ago, Hunt's earnings grew dramatically. This is a
carrier that could conceivably double or triple its earnings over the next two
to three years, if rail service turns around. I don't know of another
truckload carrier that is capable of doing that right now.
    Albrecht states, "Covenant is a $13 stock that just
finished 1999 with $1.48 a share in EPS. CVTI has consistently demonstrated
the best pricing power in the business as freight rates have been raised a
minimum of 2% a year for four consecutive years. Covenant also markets its
services as an alternative to airfreight shippers. With Covenant's team
service, much of the country can be serviced with two-day deliveries, which is
the fastest growing product for airfreight companies. In fact, team truck
service means that roughly 1,000 miles can be covered overnight. Yet compared
to true airfreight rates, Covenant's rates are often 50% to 80% cheaper, yet
just as reliable."
    Albrecht continues, "In summary, we like the niche markets Covenant
competes within. Eagle Airfreight , a freight forwarder I am
recommending, is Covenant's largest customer. Eagle is an airfreight forwarder
that has sold ground services as an alternative to domestic airfreight
shippers, so these two companies have been excellent partners in one another's
success."
    About M.S. Carriers , Jeanne says "the story over the last
couple of years is that they have made a number of operational and structural
changes that have improved both productivity and earnings visibility. The
company has also made a couple of acquisitions and now has the critical mass
and geographic coverage necessary to compete for large core carrier bids and
dedicated fleet business."
    Jeanne concludes with Knight Transportation and Heartland
Express as he explains: "Over the last year or so, each has
struggled a little bit, with drivers and top-line growth. Both have recently
made changes to their driver programs that have allowed them to reaccelerate
growth. Knight has had some success bringing drivers in through its driver
school, while Heartland has addressed the issue largely through a driver pay
increase. What's interesting about both of them is that if competition for
drivers creates a pay war, these are the two carriers in the truckload group
that are in the best position to withstand it. They have the highest margins
in the business and are essentially debt free. Both are buy rated and should
perform well in the coming year."
     About Forward Air , Albrecht states: "Forward Air, unlike
most transportation companies, continues to expand its margins and generates
tremendous financial returns. For example, its return on capital is over 30%
while its return on equity exceeds 40%. With its large owner-operator base,
FWRD has little exposure to higher fuel costs. Forward Air is the
trucking/airfreight play investors would be wise to consider."
    To obtain a copy of this insightful 14,500 word report call 212-952-7433
or see http://www.twst.com/info55.htm
    This report is included in the INDUSTRY/SERVICES Sector of TWST Online at
http://www.twst.com/sectors/indust.html
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