Trucking specialist Saia (SAIA -0.18%) said shipments were up 18% in April compared to a year ago, sparking some hope that the worst is in the rearview mirror following a difficult few quarters for transport companies.
The news is giving the entire sector a lift, with Saia stock zooming ahead by up to 14% on Tuesday, while shares of rival Old Dominion Freight Line (ODFL -0.67%) jumped as much as 7.5%. The two stocks were up 8% and 4%, respectively, as of noon ET.
Has demand finally bottomed out?
Investors in trucking companies have been traveling a bumpy road lately. The industry got a big boost in the aftermath of the pandemic as customers struggled to keep their warehouses stocked, but over the past year, concerns about inflation and a slowing economy have led to softening demand for transportation services.
Transportation is a cyclical business, and the question for investors has been when the cycle will turn again and demand will rebound.
Saia's update on operations provided reasons for hope. The company said less-than-truckload shipments per workday increased by 18% year over year in April and by 18.6% in May.
The growth could be in part due to changes in the competitive marketplace following the liquidation of Yellow Corp. But the trend is encouraging, and investors are reading the numbers as a positive sign for the entire sector.
Is now the time to buy trucking stocks?
It's hard to tell when exactly a cycle will turn, and investors buying in today could face another couple of difficult quarters if questions remain about the economy.
But both Saia and Old Dominion are top operators that have the wherewithal to survive downturns and thrive in good times. With cyclical stocks, it is best to buy when conditions are challenging and shares are under pressure. Even after Tuesday's jump, now is an attractive time for patient investors to consider starting a position in Saia or Old Dominion.
