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11/26/07
FOR SOME TIME NOW, JOHN NEFF, the legendary former portfolio manager at Vanguard Windsor and a member of the Barron's Roundtable has been singing the praises of YRC Worldwide, the trucking company formally known as Yellow Roadway. We joined the chorus this year, when the stock was trading at 40 ("A Green Light for Yellow," Jan. 15, 2007). Alas, the shares now fetch 17.
At the risk of causing a pile-up, Neff says he still likes YRC. And so do we.
"Earnings haven't lived up to expectations," Neff notes, though he thinks the stock "is a steal here." Surging oil prices and disappointing volume, among other culprits, have hurt the bottom line, and given today's soft economy "earnings are not going to be good this year," Neff warns. He assumes that U.S. gross domestic product will grow just 1.5%-2% next year.
Yet he thinks YRC's profits could rise to $3 a share in 2008 from this year's expected $2.30, while its shares could rally to 25-30. Based on these estimates, the stock still would trade for only eight to 10 times profits. With a stock-market value of less than $1 billion, YRC also could be an acquisition target. "It's a sitting duck," he says.
Based in Overland Park, Kan., YRC is one of the world's largest freight-transportation-service providers, with brands including Yellow Transportation, Roadway, Reimer Express, USF, New Penn Motor Express and YRC Logistics.
Says CEO Bill Zollars: "People are finally waking up to the fact" that the demand for hard goods is "deteriorating" and the economy has been "challenging." But he contends that YRC stock is "a great buy, with tremendous upside" when the economy begins to rebound. That could happen by the second half of 2008. Trucking volume, however, usually picks up three to six months before the data show a recovery.
http://www.yourroadway.com/Roadways News Archive.htm
11/26/07
FOR SOME TIME NOW, JOHN NEFF, the legendary former portfolio manager at Vanguard Windsor and a member of the Barron's Roundtable has been singing the praises of YRC Worldwide, the trucking company formally known as Yellow Roadway. We joined the chorus this year, when the stock was trading at 40 ("A Green Light for Yellow," Jan. 15, 2007). Alas, the shares now fetch 17.
At the risk of causing a pile-up, Neff says he still likes YRC. And so do we.
"Earnings haven't lived up to expectations," Neff notes, though he thinks the stock "is a steal here." Surging oil prices and disappointing volume, among other culprits, have hurt the bottom line, and given today's soft economy "earnings are not going to be good this year," Neff warns. He assumes that U.S. gross domestic product will grow just 1.5%-2% next year.
Yet he thinks YRC's profits could rise to $3 a share in 2008 from this year's expected $2.30, while its shares could rally to 25-30. Based on these estimates, the stock still would trade for only eight to 10 times profits. With a stock-market value of less than $1 billion, YRC also could be an acquisition target. "It's a sitting duck," he says.
Based in Overland Park, Kan., YRC is one of the world's largest freight-transportation-service providers, with brands including Yellow Transportation, Roadway, Reimer Express, USF, New Penn Motor Express and YRC Logistics.
Says CEO Bill Zollars: "People are finally waking up to the fact" that the demand for hard goods is "deteriorating" and the economy has been "challenging." But he contends that YRC stock is "a great buy, with tremendous upside" when the economy begins to rebound. That could happen by the second half of 2008. Trucking volume, however, usually picks up three to six months before the data show a recovery.
http://www.yourroadway.com/Roadways News Archive.htm