A key resistance level has emerged in the chart of Old Dominion Freight Line (ODFL).  If this level is surpassed a breakout could occur.

ODFL is the third- largest less-than-truckload carrier in the United States, with more than 235 service centers and 9,200-plus tractors. It also offers value-added services such as container drayage, supply chain consulting, and truckload brokerage.

ODFL is a fast-growing company that has increased its market share through organic growth. The company had a strong fourth quarter with earnings up 34.2%. ODFL also established a new record for their cargo claims ratio at 0.1%.

The company opened eight new facilities last year, one in January, and plans to open two to three additional locations in this quarter, which increase the overall average capacity within their network.

ODFL has a strong balance sheet with $401.4 million in cash and cash equivalents at the end of the year. This compares with only $99.9 million in long-term debt. The company is also profitable with a return on equity of 19.8%.

Revenues are expected to grow 10.5% this quarter and 28.6% next quarter. Earnings are forecasted to rise 39.6 this quarter and 48.8% next quarter. The stock does have a high valuation, with a P/E of 36.9, but that’s less than the industry average and the S&P 500.

The stock has shown positive near, mid, and long-term momentum and also has a grade of B, or Buy rating in our POWR Ratings system.

Take a look at the 1-year chart of ODFL below with added notations:

Chart of ODFL provided by TradingView

ODFL has been on a continual trend higher for most of the past year, with the usual pullbacks along the way. However, the stock has recently hit the $212.50 level (red) as key resistance, which is also the 52-week high barrier. A break of that $212.50 mark most likely means another long leg higher for ODFL.

The possible long position on the stock would be on a breakout above the $212.50 resistance level with a protective stop placed under it.

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ODFL shares were unchanged in premarket trading Monday. Year-to-date, ODFL has gained 7.31%, versus a 4.14% rise in the benchmark S&P 500 index during the same period.

About the Author: christian

Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock. More...

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