Investor_NICK
Biotech & Technology Investor
J.B. Hunt, a best-in-class trucking business, appears to have run out of the pricing power needed to pass high diesel costs on to customers. It announced an earnings drop of 5% to 10% because of rising fuel costs. Diesel is approaching $7 a gallon, which is more bearish than the recent move in yields, with consumers and businesses paying roughly $700M more a day for fuel than a year ago. x.com
Trucking and freight brokerage stocks look extended and expensive, pricing in an improbably steep earnings ramp. CDL licensing is tightening capacity and AI capex buildouts help areas such as flatbed, but J.B. Hunt trades near 30x next year's earnings. XPO is the most egregious, as less-than-truckload carriers will lag the upcycle while adding capacity. Landstar faces weak brokerage margins and platform pressure versus other public brokerages, before AI's effect on take rates. x.com
Rising diesel prices are less of a threat to Hecla's margins than feared, since diesel contributes only 3% of its operating costs, per its investor conference. x.com
Legitimate trucking companies like J.B. Hunt should start making a lot of money as enforcement pushes noncompliant drivers off the road. Per a quoted trucking post, DOT emergency-closed 110 CDL schools tied to 5,000 drivers who failed roadside English checks, with 160-plus more at risk, and trucks abandoned by drivers are being impounded. x.com
High gasoline prices threaten Walmart's guidance. Gasoline is $5, making the expectation of great guidance pointedly doubtful. x.com
UPS, Saia and XPO are among the most exposed to competitive and price pressure from Amazon's new Supply Chain Services, yet their shares have glossed over it, with UPS up almost daily for two weeks. LTL and parcel demand is lagging, and these carriers have relied heavily on price to offset higher costs and weaker volumes. Amazon's entry should squeeze both sides, especially for domestic players. Broader trucking has support from regulatory crackdowns and AI-related flatbed demand. x.com
United Airlines' weak Q4 earnings outlook is driven by its higher fuel-price assumption, supporting the case for buying through temporary fuel pressure. United guided to $0.50-$1.50 in EPS using $4.80 per gallon; its disclosure says consensus assumes $4.35, a difference worth about $1.00 in quarterly EPS. x.com
Walmart and Costco should gain as soaring diesel costs push consumers to trade down. Diesel is up 35% in 40 days and moves the trucks that stock every US shelf, and though America produces about as much oil as it uses, oil trades globally, so Europe's shortage hits US prices. Retailers must raise prices and lose volume or absorb costs and miss guidance. Discounters are big enough to absorb the shock and win trade-down shoppers; packaged food, staples and restaurants look best avoided. x.com … Show more
Delta's Q3 results support a bullish view despite fuel pressure: the airline absorbed $500M in higher fuel expenses while revenue rose 32.9% year over year to $20.2B and beat estimates by $1.28B, although adjusted EPS of $1.72 missed by $0.04. x.com
Old Dominion and Saia look well placed as solid-balance-sheet LTL consolidators: such periods have historically been good for them, and FOX reports trucking bankruptcies amid surging diesel costs. At current valuations, they look roughly equally attractive. x.com x.com
Mid-tier restaurant chains like Shake Shack and CAVA face rising input costs they will struggle to pass on. Cattle prices are at an all-time high, and the war is set to raise packaging costs alongside surging transportation costs, driven partly by oil and mostly by CDL licensing rules. Low-end chains McDonald's and Yum keep pushing value pricing to win back consumers, limiting mid-tier pricing power heading into earnings. x.com
