The economy ebbs and flows. Today’s slowdown will eventually give way to the next recovery and move stocks higher. The stock market tends to start moving higher before the economic data shows such a recovery.
That’s why investors should focus on companies that will benefit from the next boom during a bust. Such a move ensures that investors and traders alike can capture the biggest part of the move as it happens.
When the economy slows, so does the flow of goods and services. That causes these companies to take a hit. But they recover, as the flow of goods and services tends to rise over time.
One play for this space is J.B. Hunt Transport Services (JBHT), a big player in trucking and logistics. Every good needs to be shipped by truck at some point, even if it’s just a few miles to its final point of sale.
The company recently reported a disappointing quarter, with revenues down 3 percent year-over-year.
Action to take: Shares are reasonably valued at 18 times forward earnings, down from over 32 times earnings a year ago. JBHT shares yield about 0.9 percent at today’s prices, but the company has a history of raising its dividend, even amid tough times like today’s.
For traders, shares recently popped higher on the latest quarterly report, and may give up some of those gains in the coming days. The February $180 puts, last going for about $4.25, could deliver quick mid-double-digit returns on a short-term drop in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.