Keep On Truckin’- Three Calls on Economic Strength and Hurricane Demand

I’ve been keeping my eye on the truckers as a group I want to own and have been waiting for it to take a breather before jumping in. However, with Hurricanes Harvey and Irma hitting the U.S. back to back, I think the stocks will keep moving higher.

The Trades:

Buy to open the December 15, 2017, call on SAIA Inc. (SAIA) with a strike price of $60 at $3.30 or lower. Symbol (SAIA171215C60)

Buy to open the October 20 , 2017, call on Old Dominion Freight (ODFL) with a strike price of $105 at $1.15 or lower. Symbol (ODFL171020C105)

Buy to open the October 20 , 2017, call on Werner Enterprises Inc. (WERN) with a strike price of $35 at $.80 or lower. Symbol (WERN171020C35)

The Rationale: Demand for supplies and building materials will keep these trucks filled to capacity. The stocks of most infrastructure companies have moved up rapidly on expectations of hurricane related demand. We had a great trade on those stocks last week. I think the truckers that carry those goods are a great secondary way to play the surge in demand and have yet to fully reflect the improved fundamentals.

Even before the storms, demand for trucking capacity was increasing. This is partly due to a healthy economy and partly due to logistical issues with some of the nation’s largest rail companies. Delays and shutdowns at several railroads shifted cargo to more nimble truckers, who are now raising rates as demand surges.

Each one of these companies will report third quarter earnings in late October when I expect they will update investors on the state of demand.

Although none of them has scheduled a formal date, Werner is expected to announce before the October 20 expiration of the calls above. SAIA is not expected to report until after the October expiration date so I moved into the December series.

The December Old Dominion calls were outrageously priced so I may roll these October calls over as we get closer to the earnings date.

I will alert you of the conference call schedules with information of what to listen for as we get closer to those dates.