Many US stocks cheapened up during the first quarter's choppy trading scene, relieving some concern investors had about lofty valuations.
But the companies that move goods through a humming economy now look among the market's best bargains, as long as the US-China trade dispute doesn't derail their outlook.
Railroad and trucking stocks took a hit starting in late January just like the rest of the market. From its record high on January 26, the S&P 500 slumped more than 10 per cent in less than two weeks to enter a correction, and the S&P 1500 road and rail index fell 9.1 per cent.
Demand to move US goods by rail, truck and ship, however, has held firm so far this year. So the shippers emerged from the tumult sporting some of their cheapest valuations in years thanks to an atypical phenomenon: as their share prices were falling, their earnings expectations were moving up sharply - meaning their price-to-earnings ratios fell by an even wider margin.
Eric Marshall, portfolio manager and Director of Research, Hodges Capital Management in Dallas, Texas said the volatility seen in the first quarter was actually a healthy thing for the entire market, resetting expectations, and keeping excess valuations from bubbling up.
That valuation reset may mean more upside for these stocks than the market as a whole if earnings reports in the coming days validate those optimistic profit forecasts.
Now that it has occurred, people have gone back in, re-evaluated the fundamentals and those stocks are starting to work their way back up off of a base, Mr Marshall said.
J B Hunt Transportation may provide investors with a template of what to expect.
The trucker's shares fell more than 13 per cent between late January and early April. But its forward P/E ratio slumped by twice that margin, 27 per cent, contracting from 27.2 to 19.8, below its five-year average of 21.5.
By comparison the full S&P 500's P/E ratio contracted by about 12 per cent to 16.3, and still sits above its historic average of 15.1.
The stock surged more than 6 per cent in the wake of its earnings on Monday, its best day in five years. Nine of the analysts tracking the stock have raised their price targets since then.
On the rail side, CSX saw its forward PE drop from 22.02 in mid-January to 16.05 on February 8, well below its five-year average of 19.9. Its shares rose nearly 8 per cent on Wednesday, its best day in six years, following its quarterly results to send the stock to a record closing high of $61.01.
A big concern, however, is an escalation of the current trade dispute between the US and China, which was a primary cause of the recent downturn in the group.
The United States imposed a 10 per cent tariff on aluminium imports on March 23 along with a 25 per cent duty on steel imports. US President Donald Trump called for the tariffs to protect US metal makers from cheap imports.
A strengthening economy, however, is likely to overpower those concerns and shipping companies are primed to benefit.
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Read more:
British and UAE transport chiefs in joint plan to keep the country's railways on track
Should a China-US trade war worry UAE investors?
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In a recent note to clients, Morgan Stanley noted its TLFI index, which measures the incremental supply and demand for Dry-Van Truckload services, has done better than its typical performance for this time of the year despite a decline over the past two weeks.
The index is projected above levels last seen in 2014, but below the fourth-quarter of 2017. When a given reading is above a prior year's level, it means there is more freight demand relative to available capacity, according to the firm.
Earnings are expected at the end of April and early May from rail and trucking names such as Union Pacific, Norfolk Southern and Genesee & Wyoming as well as trucking companies Knight-Swift Transportation and Heartland Express. Each are currently at or below their two-year average forward PE.
While these stocks are poised to benefit from continued economic growth, they could also be susceptible to another bout of trade war concerns, even if they are relatively insulated to the global economy.
A Reuters poll of over 500 economists worldwide showed the global economy will race further ahead this year, expanding at its fastest pace since 2010, but trade protectionism has the potential to derail that momentum.
"These stocks will see bigger up days and bigger low days but over the long term the fundamentals will lay out," said Jim Corridore, equity analyst at CFRA in New York.
"Of course if the entire economy blows up because of trade wars, that is a risk that has to be thought about, but I just don’t see it happening at this time."
Reuters
The biog:
Favourite book: The Leader Who Had No Title by Robin Sharma
Pet Peeve: Racism
Proudest moment: Graduating from Sorbonne
What puts her off: Dishonesty in all its forms
Happiest period in her life: The beginning of her 30s
Favourite movie: "I have two. The Pursuit of Happiness and Homeless to Harvard"
Role model: Everyone. A child can be my role model
Slogan: The queen of peace, love and positive energy
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Match info
Huddersfield Town 0
Chelsea 3
Kante (34'), Jorginho (45' pen), Pedro (80')
Royal Birkdale Golf Course
Location: Southport, Merseyside, England
Established: 1889
Type: Private
Total holes: 18
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Saturday's results
Brighton 1-1 Leicester City
Everton 1-0 Cardiff City
Manchester United 0-0 Crystal Palace
Watford 0-3 Liverpool
West Ham United 0-4 Manchester City
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Another way to earn air miles
In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.
An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.
“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.
ICC men's cricketer of the year
2004 - Rahul Dravid (IND) ; 2005 - Jacques Kallis (SA) and Andrew Flintoff (ENG); 2006 - Ricky Ponting (AUS); 2007 - Ricky Ponting; 2008 - Shivnarine Chanderpaul (WI); 2009 - Mitchell Johnson (AUS); 2010 - Sachin Tendulkar (IND); 2011 - Jonathan Trott (ENG); 2012 - Kumar Sangakkara (SL); 2013 - Michael Clarke (AUS); 2014 - Mitchell Johnson; 2015 - Steve Smith (AUS); 2016 - Ravichandran Ashwin (IND); 2017 - Virat Kohli (IND); 2018 - Virat Kohli; 2019 - Ben Stokes (ENG); 2021 - Shaheen Afridi
COMPANY%20PROFILE
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Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Indoor cricket in a nutshell
Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
COMPANY%20PROFILE
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Match info
Athletic Bilbao 0
Real Madrid 1 (Ramos 73' pen)
THE%20SPECS
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ATP WORLD No 1
2004 Roger Federer
2005 Roger Federer
2006 Roger Federer
2007 Roger Federer
2008 Rafael Nadal
2009 Roger Federer
2010 Rafael Nadal
2011 Novak Djokovic
2012 Novak Djokovic
2013 Rafael Nadal
2014 Novak Djokovic
2015 Novak Djokovic
2016 Andy Murray
2017 Rafael Nadal
2018 Novak Djokovic
2019 Rafael Nadal
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%20%3C%2Fstrong%3EDirect%20Debit%20System%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20Sept%202017%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20with%20a%20subsidiary%20in%20the%20UK%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20FinTech%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20Undisclosed%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Elaine%20Jones%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%208%3Cbr%3E%3C%2Fp%3E%0A
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
