When stocks are plummeting in price, it’s hard to start buying into all the uncertainty. But a disciplined long term investor knows there’s no better time to buy than right now. And I’m not talking about buying into speculative, high-risk stocks. I’m talking about the well-proven, robust track record J.B. Hunt Transport Services, Inc.. Why? Size. Financial health. Proven performance.
J.B. Hunt Transport Services, Inc., together with its subsidiaries, provides surface transportation and delivery services in the continental United States, Canada, and Mexico. Started in 1961, and headed by CEO John Roberts, the company size now stands at 27.62k people and with the market cap of US$11b, it falls under the large-cap stocks category. Size matters. The bigger the company is, the more well-resourced it is. The more money it produces from its operations which means it is less reliant on external funding. When times are bad in the market, being self-sufficient is extremely important as you can continue to operate at your own pace. Therefore, large cap companies are a great bet to invest in when you’re heading to the bottom of the cycle.
Currently J.B. Hunt Transport Services has US$1.2b on its balance sheet, which requires regular interest payments. This requires the business to have enough cash to meet these upcoming interest expenses. J.B. Hunt Transport Services generates enough earnings to cover its interest payments, more specifically, its interest coverage ratio (EBIT/interest) is 16.94x, which is well-above the minimum requirement of 3x. Furthermore, its cash flows from operations copiously covers it debt by 94%, above the safe minimum of 20%. Its cash and short-term investment is also sufficient to cover other upcoming liabilities, which means JBHT is financially robust in the face of a volatile market.
JBHT’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 15%, outperfoming the market growth rate of 12%. It has also returned an ROE of 23% recently, above the industry return of 12%. Characteristics I value in a long term investment are proven in J.B. Hunt Transport Services, and I can continue to sleep easy at night with the stock as part of my portfolio.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. J.B. Hunt Transport Services tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for JBHT’s future growth? Take a look at our free research report of analyst consensus for JBHT’s outlook.
- Valuation: What is JBHT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether JBHT is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.