Grading Top-3 Trucking Stocks After Supreme Court Ruling Drives Surge
The Supreme Court ruling favors trucking outfits that handle their own logistics.
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The big names behind big rigs received some good news on Thursday. As a result, trucking stocks shot higher, and may have additional upside ahead.
The U.S. Supreme Court ruled that a man injured by a speeding truck in 2017 can sue the country’s largest freight broker, C.H. Robinson Worldwide (CHRW) . Freight brokers act as intermediaries between businesses that need goods shipped, and the trucking companies that provide that service.
Brokers Can Be Held Liable
The court’s ruling means that freight brokers can be held liable for injuries and other damages that occur in the performance of their business activities, including for the actions of the trucking outfits they recommend.
C.H. Robinson Worldwide initially fell sharply on the news, and traded below its 200-day moving average (red) for the first time this year. The stock recovered to lose just 2% on the day.
While the decision is bad news for freight brokers like C.H. Robinson, it’s positive for the major carriers. As a result of the Supreme Court ruling, it’s expected that more business will be driven toward the larger trucking outfits. Many of those companies control their own logistics, instead of farming them out to a freight broker.
We sifted through the charts of those carriers to see which names have the most potential upside right now.
1. Knight-Swift Transportation Holdings (KNX)
Shares of Knight-Swift Transportation Holdings (KNX) roared higher by 13.8% on Thursday to close at an all-time high. A massive bullish candle engulfed most of the previous month’s activity.
The move occurred on the stock’s highest turnover in years (arrow), an indication that institutional investors were active participants.
Knight-Swift has formed an A-B-C-D pattern. Based on that bullish formation, the stock’s momentum could soon carry it to the $80 area.
GRADE: A-
2. J.B. Hunt Transport Services (JBHT)
Shares of J.B. Hunt Transport Services (JBHT) also closed at an all-time high on Thursday, rising by 7%. A similar A-B-C-D pattern has formed on this stock, suggesting a rally to the $295 area.
While Thursday's turnover was higher than normal, it wasn’t extraordinary (arrow).
GRADE: B+
3. Werner Enterprises (WERN)
Shares of Werner Enterprises (WERN) shot higher by 7.4% on the Supreme Court ruling. The stock faces major resistance just ahead, at about $38.50 (black dotted line).
If Werner can break through that resistance, it’ll trade at a 52-week high.
GRADE: B
Bottom Line
The rise of online shopping has led to a major increase in demand for overland shipping. This means more activity by logistics companies like C.H. Robinson. Thursday’s Supreme Court decision opens the door for a potential flood of lawsuits against freight brokers, favoring trucking outfits that handle their own logistics.
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At the time of publication, Ponsi was long KNX and JBHT.
