Small-Cap Opportunities In Trucking—Royce
article , video 08-26-2019

Jay Kaplan On The Road Ahead For Trucking

PM Jay Kaplan details two companies he likes in the trucking industry.


The trucking industry is pretty interesting right now. It’s a very good barometer on the overall U.S. economy. A lot of stuff moves around on trucks. Because the market thinks a recession is coming soon, the truck stocks are very reasonably priced. Let me give you an example of one.

A stock I like in the trucking area is Werner Enterprises. They are a truckload carrier. There are two kinds of trucking companies. There are truckload and less than truckload. Imagine a big truck behind your local Walmart that is filled with nothing but Tide. That was delivered by a truckload carrier, like Werner. Werner’s business is good right now. Not as good as a year ago, but it’s still good. Werner has the most modern fleet in the industry; they’ve spent a lot of money. That capital spending is over, so now the excess cash flow is going to be really good and they just announced a large, special dividend and a stock buyback. We think that’s a great signal of management’s confidence in the near future, so Werner is a name we really like in here.

Saia is another company I like in the trucking industry. It’s a less than truckload carrier, so it picks up smaller, industrial shipments, fills up a truck, goes to a centralized place, breaks it up, refills the trucks, delivers them. Business is good. Again, not as good as a year ago. The economy is slowing, but still growing. The interesting thing about Saia is it was mostly a regional business in the Southern U.S. They’re now opening facilities in the Northeast, and their customers are following them. So, even if business is slow, they have great growth opportunities in new geographies.




Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of July 10, 2019 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

The performance data and trends outlined in this presentation are presented for illustrative purposes only. Past performance is no guarantee of future results. Historical market trends are not necessarily indicative of future market movements.

Percentage of Fund Holdings As of 6/30/2019 (%)


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Company examples are for illustrative purposes only. This does not constitute a recommendation to buy or sell any stock. There can be no assurance that the securities mentioned in this piece will be included in any Fund’s portfolio in the future.

There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)



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