Daseke (DSKE) is an under the radar, small-cap trucking stock that operates in North America that was founded in 2008 and headquartered in Addison, Texas. The company provides transportation and logistics solutions with a focus on flatbed and specialized freight. It operates through two segments: Flatbed Solutions and Specialized Solutions. 

The company’s customers include companies in aerospace, defense, steel, manufacturing, construction, building materials, and mining. It also offers logistical planning and warehousing services. Currently, it operates 2,953 company-owned tractors and 2,099 independent-owned contractors tractors; and 11,579 trailers. 

The post-pandemic economy has been very bullish for trucking companies as the stimulus payments led to an increase in the amount of goods that were bought by Americans. For DSKE, it’s led to a turnaround in earnings and a more than 20% increase in revenue. Further, strength in DSKE’s customers’ end markets makes the picture even more bullish.

Read on to find out why DSKE is our featured stock under $10 of the week…

Growth

Over the long term, stock prices are correlated with a business’ earnings power. Thus, it’s always important to pay attention when a stock’s earnings are at an inflection point.

We have such an opportunity in DSKE. Last quarter, the company reported $0.30 per share in earnings. Compare this to a loss of $4.25 per share in 2019’s Q3 and a $0.17 per share profit in last year’s Q3. Such steady improvement in earnings is one ingredient in a stock price that can outperform for the long term.

Another attribute of growth stocks is that analysts are constantly hiking revenue and earnings estimates. This is the case with DSKE as analysts have increased full-year EPS estimates to $0.72 per share from $0.18 per share 3 months ago. 2022 EPS estimates were raised to $0.91 from $0.49 3 months ago. 

Value

Despite this impressive growth profile, DSKE is also attractive from a valuation basis. The company has a forward P/E of 10.1 which is less than half of the forward P/E of the S&P 500. Another way to assess value is by looking at a company’s P/FCF. Here, DSKE also stands out as it is set to generate about $120 million in cash which the company should use to pay off debt

Wall Street analysts are also bullish on the stock as the stock has Buy ratings or Strong Buy ratings from all 4 analysts covering the stock. Further, they have a consensus price target of $12.6 which implies a 34% upside.

POWR Ratings

Given DSKE’s attractive growth and value profile, it’s not surprising that the stock is rated a B by the POWR Ratings which equates to a Buy rating. B-rated stocks have posted an average annual performance of 19.7% which compares favorably to the S&P 500’s annual performance of 7.1%. 

The POWR Ratings also evaluates stocks by different components to give additional insight on each stock. DSKE has B grades for Value and Momentum. The POWR Ratings also provides component grades for other categories like Growth, Stability, Sentiment, Industry, and Quality. To see DSKE’s POWR Ratings, click here. 

Conclusion

Trucking stocks will continue to benefit from the current circumstance of bottlenecks and delayed shipments. This is leading to increased pricing power, while demand stays strong due to rising wages and a strong industrial recovery.

The economy hit a big road bump in the last quarter due to the delta variant with growth slowing to 2%. This caused a dip in cyclical stocks. However, as case counts recede, growth is likely going to pick back up to around 6 to 7% in Q4 which could see cyclical stocks like DSKE end the year at new highs. 

DSKE shares were trading at $9.43 per share on Tuesday afternoon, down $0.07 (-0.74%). Year-to-date, DSKE has gained 62.31%, versus a 24.75% rise in the benchmark S&P 500 index during the same period.

About the Author: Jaimini Desai

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...

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