By Stuart Burns
Well, it was going to happen sooner or later, wasn't it?
After vilification from just about everyone, the LME will now probably face competition from a rival with the infrastructure - the CME Group Inc. - to create a viable alternative to the LME's aluminum contract. The LME has seen the brunt of mounting criticism from just about all quarters, blamed for all the wrongs of the aluminum market (not least of which transparency of who holds aluminum positions.)
The aluminum contract is considered to be out of touch and unrepresentative of true market prices, according to major producers such as Alcoa. Exit queues of greater than 100 days, in some locations 200 days, mean the market has long since ceased to be a viable source for consumers and only has value to producers in as much as freight incentives offered by warehouse operators have pushed up the physical delivery premiums.
These price premiums bring much needed additional revenue to producers able to secure the premium in their sales - not always an easy exercise for vertically integrated smelters that struggle to pass on the premium to consumers of semi-finished products.
Top 5 Media Companies To Own For 2015: Heartland Express Inc (HTLD)
Heartland Express, Inc. (Heartland), incorporated on August 8, 1986, is a short-to-medium haul truckload carrier. The Company provides regional dry van truckload services through its regional terminals plus its corporate headquarters. The Company transports freight for shippers and generally earns revenue based on the number of miles per load delivered. The Company�� primary traffic lanes are between customer locations east of the Rocky Mountains. The Company is a holding company of Heartland Express Inc. of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc. and A & M Express, Inc. Heartland operates nine specialized regional distribution operations in Atlanta, Georgia; Carlisle, Pennsylvania; Chester, Virginia; Columbus, Ohio; Jacksonville, Florida; Kingsport, Tennessee; Olive Branch, Mississippi; Phoenix, Arizona, and Seagoville, Texas. The Company operates maintenance facilities at all regional distribution operating centers along with shop only locations in Fort Smith, Arkansas and O��allon, Missouri. In November 2013, Heartland Express Inc acquired 100% of the stock of Gordon Trucking, Inc.
The Company�� operations department is responsible for maintaining the continuity between the customer�� needs and Heartland�� ability to meet those needs by communicating customer�� expectations to the fleet management group. They are charged with development of customer relationships, ensuring service standards, coordinating proper freight-to-capacity balancing, trailer asset management, and daily tactical decisions pertaining to matching the customer demand with the appropriate capacity within geographical service areas. They assign orders to drivers based on well-defined criteria, such as driver safety and United States Department of Transportation (the DOT) compliance, customer needs and service requirements, on-time service, equipment utilization, driver time at home, operational efficiency, and equipment maintenance needs. Fleet management is r! esponsible for driver management and development. Their responsibilities include meeting the needs of the drivers within the standards that have been set by the organization and communicating the requirements of the customers to the drivers on each order to ensure successful execution. Serving the short-to-medium haul market (500 miles average length of haul in 2012) permits the Company to use primarily single, rather than team drivers and dispatch loads directly from origin to destination without an intermediate equipment change other than for driver scheduling purposes.
Advisors' Opinion:- [By Ben Levisohn]
Shares of Heartland Express (HTLD) rose today despite being cut by Stifel Nicolaus for valuation reasons.
Bloomberg NewsShares of Heartland Express have gained 50% this year, trumping the 38% rise in Con-Way (CNW) and the 29% advance in J.B. Hunt Transport Services (JBHT) but lagging Old Dominion Freight Lines (ODFL) and Swift Transportation (SWFT).
That big gain was enough for Stifel’s John Larkin say no mas and cut his rating on Heartland Express. They explain why:
Downgrading from Buy to Hold as the company’s shares appear fully and fairly valued. In fact, shares have recently traded through our 12-month fair value estimate of $19 (or 16.0x our 2015 EPS estimate of $1.15 plus ~$0.68 per share NPV of future cash tax benefits).
Rating change is primarily valuation based as well as from our view that most transportation equities are trading ahead of the still mediocre underlying freight market fundamentals.
BB&T’s Thomas Albrecht and team, who upgraded Heartland Express to Buy from Hold yesterday, explain why they think the stock will do just fine regardless of the economy:
Heartland is an intriguing play upon both a slow-growth economy and a rapidly growing one (along with tight capacity). Many carriers are only able to thrive in the latter environment. With HTLD we believe that even in a sluggish economy it has a self-generating EPS story through the integration and growth of Gordon. Q3’13, a very difficult quarter for TL carriers, saw HTLD post a 79.3% OR versus 83.3%.
The timing of the Gordon deal seems ideal, similar to the Great Coastal acquisition in mid-2002. Back then the TL market was stabilizing, but had yet to really take off, which occurred in the back half of 2003. Those 4-5 quarters allowed HTLD to assess customers, integrate operations, consolidate facilities and get ready for the next cycle. By the time that occurred HTLD was ready to take advantage of the capacity
- [By Ben Levisohn]
Heartland Express (HTLD) has dropped 2.2% to $19.12 after it was cut to Hold from Buy at Stifel Nicolaus.
Allergan (AGN) was upgraded to Outperform from Market Perform at Wells Fargo.
5 Best Freight Stocks To Buy For 2014: Universal Truckload Services Inc (UACL)
Universal Truckload Services, Inc., incorporated on December 11, 2001, is engaged in providing transportation services to shippers throughout the United States and in the Canadian provinces of Ontario and Quebec. The Company�� over-the-road trucking services include both flatbed and dry van operations and it provides rail-truck and steamship-truck intermodal support services. It also offers truck brokerage services, as well as full service international freight forwarding and customs house brokerage services. The Company provides truckload transportation and related services for a range of general commodities over irregular routes using dry and specialty vans and un-sided trailers, including flatbed, drop deck, and specialty. In December 2013, the Company announced that it has completed acquisition of Westport Axle Corporation.
The Company primarily operates through a contractor network of agents and owner-operators who provide the Company with approximately 3,100 tractors and approximately 3,000 trailers. At December 31, 2011, the Company had approximately 565 agents. The Company conducts its operations through its wholly owned operating subsidiaries under the brand names, such as Universal Am-Can, Ltd., Mason & Dixon Lines, Inc., Louisiana Transportation Inc., Mason Dixon Intermodal, Inc., Economy Transport, Inc., Great American Lines, Inc., Universal Logistics Solutions, Inc., Universal Logistics Solutions International, Inc. and Cavalry Transportation, LLC.
The Company provides services in three categories, such as truckload services, brokerage services and intermodal support services. The Company transports a range of general commodities, including machinery, building materials, paper, food, consumer goods, automotive parts, furniture, steel and other metals. During the year ended December 31, 2011, its truckload operations represented 60.5%, of its operating revenues.
The Company provides primarily broker freight to third-party transportation providers th! rough its agent network at times when the Company generates more freight business than it can service with its available owner-operators. The Company offers full service international freight forwarding and customs house brokerage services, as well as third-party logistic services. During 2011, its brokerage services represented 24.8%, of its operating revenues. Its intermodal support services are primarily short-to-medium distance delivery of rail and steamship containers between the railhead or port and the customer and drayage services. During 2011, its intermodal support services represented 14.7% of its operating revenues.
The Company�� agents provide the primary interaction with its shippers. They generate freight shipments and also provide terminal and dispatch services for the owner-operators and are an essential source for recruitment of new owner-operators. The agents use a company-provided software program to list available freight procured by the agent, dispatch owner-operators to haul the freight and provide all administrative information necessary for it to establish the credit arrangements for each shipper. The owner-operators are individuals who own, operate and maintain one or more tractors that they either provide drivers, or drive themselves. The Company�� owner-operators provide it with approximately 3,100 tractors. Owner-operators also may own trailers that they provide the Company in addition to their tractor and driving services. As of December 31, 2011, its owner-operators provided approximately 3,000 trailers, which represent over 50% of the trailers the Company use in its business.
Advisors' Opinion:- [By Sean Williams]
What: Shares of Universal Truckload Services (NASDAQ: UACL ) , a North American provider of trucking and logistics solutions, jumped as much as 12% after receiving an upgrade from BB&T�Capital Markets.
- [By Seth Jayson]
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Universal Truckload Services (Nasdaq: UACL ) , whose recent revenue and earnings are plotted below.
5 Best Freight Stocks To Buy For 2014: Con-way Inc (CNW)
Con-way Inc. (Con-way), incorporated in 1958, provides transportation, logistics and supply-chain management services for a wide range of manufacturing, industrial and retail customers. Con-way�� business units operate in regional and transcontinental less-than-truckload and full-truckload freight transportation, contract logistics and supply-chain management, multimodal freight brokerage, and trailer manufacturing. Con-way is divided into four segments: Freight, Logistics, Truckload, and Other. At December 31, 2011, Con-way Freight operated 286 freight service centers, of which 144 were owned and 142 were leased. At December 31, 2011, Con-way Freight owned and operated approximately 9,200 tractors and 26,400 trailers, including tractors held under capital lease agreements.
Freight
The Freight segment consists of the operating results of the Con-way Freight business unit. Con-way Freight is a less-than-truckload (LTL) motor carrier that utilizes a network of freight service centers to provide day-definite regional, inter-regional and transcontinental less-than-truckload freight services throughout North America. LTL carriers transport shipments from multiple shippers utilizing a network of freight service centers combined with a fleet of line-haul and pickup-and-delivery tractors and trailers. Freight is picked up from customers and consolidated for shipment at the originating service center. Freight is consolidated for transportation to the destination service centers or freight assembly centers. At Freight assembly centers, freight from various service centers can be reconsolidated for transportation to other freight assembly centers or destination service centers. From the destination service center, the freight is delivered to the customer. Typically, LTL shipments weigh between 100 and 15,000 pounds. In 2011, Con-way Freight�� average weight per shipment was 1,305 pounds.
Logistics
The Logistics segment consists of the operating results o! f the Menlo Worldwide Logistics business unit. Menlo Worldwide Logistics develops contract-logistics solutions, which can include managing complex distribution networks, and providing supply-chain engineering and consulting, and multimodal freight brokerage services. Menlo Worldwide Logistics��supply-chain management offerings are primarily related to transportation-management and contract-warehousing services. Transportation management refers to the management of asset-based carriers and third-party transportation providers for customers��inbound and outbound supply-chain needs through the use of logistics management systems to consolidate, book and track shipments. Contract warehousing refers to the optimization and operation of warehouses for customers using technology and warehouse-management systems to reduce inventory carrying costs and supply-chain cycle times. For several customers, contract-warehousing operations include light assembly or kitting operations.
Menlo Worldwide Logistics provides its services using a customer- or project-based approach when the supply-chain solution requires customer-specific transportation management, single-client warehouses, and/or single-customer technological solutions. However, Menlo Worldwide Logistics also utilizes a shared-resource, process-based approach that leverages a centralized transportation-management group, multi-client warehouses and technology to provide scalable solutions to multiple customers. Additionally, Menlo Worldwide Logistics segments its business based on customer type. At December 31, 2011, Menlo Worldwide Logistics operated 76 warehouses in North America, of which 55 were leased by Menlo Worldwide Logistics and 21 were leased or owned by clients of Menlo Worldwide Logistics. Outside of North America, Menlo Worldwide Logistics operated an additional 63 warehouses, of which 48 were leased by Menlo Worldwide Logistics and 15 were leased or owned by clients. Menlo Worldwide Logistics owns and operates a small fleet of tr! actors an! d trailers to support its operations, but primarily utilizes third-party transportation providers for the movement of customer shipments.
Truckload
The Truckload segment consists of the operating results of the Con-way Truckload business unit. Con-way Truckload is a full-truckload motor carrier that utilizes a fleet of tractors and trailers to provide short- and long-haul, asset-based transportation services throughout North America. Con-way Truckload provides dry-van transportation services to manufacturing, industrial and retail customers while using single drivers as well as two-person driver teams over long-haul routes, with each trailer containing only one customer�� goods. This origin-to-destination freight movement limits intermediate handling and is not dependent on the same network of locations utilized by LTL carriers. On average, Con-way Truckload transports shipments more than 800 miles from origin to destination. Under its regional service offering, Con-way Truckload transports truckload shipments of less than 600 miles, including local-area service for truckload shipments of less than 100 miles.
Con-way Truckload offers through-trailer service into and out of Mexico through all major gateways in Texas, Arizona and California. For a shipment with an origin or destination in Mexico, Con-way Truckload provides transportation for the domestic portion of the freight move, and a Mexican carrier provides the pick-up, linehaul and delivery services within Mexico. At December 31, 2011, Con-way Truckload operated five owned terminals with bulk fuel, tractor and trailer parking, and in some cases, equipment maintenance and washing facilities. In addition, Con-way Truckload also utilizes various drop yards for temporary trailer storage throughout the United States. At December 31, 2011, Con-way Truckload owned and operated approximately 2,700 tractors and 8,000 trailers, including tractors held under capital lease agreements.
Other
! The Other! reporting segment consists of the operating results of Road Systems, a trailer manufacturer, and certain corporate activities for which the related income or expense has not been allocated to other reporting segments, including results related to corporate re-insurance activities and corporate properties. Road Systems primarily manufactures and refurbishes trailers for Con-way Freight and Con-way Truckload.
Advisors' Opinion:- [By Rich Smith]
Consider: According to YRC, the $150.9 million it currently pays in annual interest exceeds the $92.6 million in interest obligations paid by "all [of its] competitors combined." Con-Way (NYSE: CNW ) , for example, sports a debt load about half of YRC's, yet pays only about one-third �as much in interest on that debt. Old Dominion Freight (NASDAQ: ODFL ) has 12% the debt �of YRC, but only 7% of the interest expense.
- [By Rich Smith]
Con-Way (NYSE: CNW ) announced that after polling its drivers for feedback on various truck manufacturers and models, it has decided to refresh its truck fleet with 525 new tractors -- 325 Kenworth T680s from Paccar, and another 200 Navistar ProStars.
- [By Ben Levisohn]
Shares of Atlas Air have plunged 15% to $37.13 today at 1:48 p.m., on what has been a lousy day for shippers and those involved with shipping. Trucking company Con-Way (CNW) has fallen 2.5% to $40.38 after it said earnings would be unchanged from a year ago, well short of analyst forecasts. FedEx (FDX) has dropped 0.7% following UPS’s miss.
5 Best Freight Stocks To Buy For 2014: PostNL NV (PNL)
PostNL NV is a Netherlands-based Company active in delivery sector. The Company is engaged in the delivery of documents, small packages and standard parcels. The Company�� business is organized into three segments: Mail in the Netherlands, responsible for mail services in the Netherland, documents management, direct marketing and fulfillment services, and operating over 2,600 shop-in-shop post offices; Parcels, providing parcel services in the Netherlands and Belgium for both domestic and cross-border parcel distribution, and International, operating in the postal markets of the United Kingdom, Germany and Italy, and focusing on domestic addressed mail services. The Company also provides marketing and communication services, fulfillment solutions and e-commerce related solutions. Advisors' Opinion:- [By Inyoung Hwang]
PostNL (PNL) sank 11 percent to 2.48 euros, the biggest decline since Jan. 14. The Amsterdam-based company said sales in the second-quarter were 1.03 billion euros ($1.37 billion), falling short of the 1.04 billion euros predicted by analysts on average. PostNL forecast addressed mail volume in 2013 will drop as much as 11 percent, greater than its previous forecast of no more than 10 percent.
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