This little known stock might be the best way to play both the upcoming economic recovery and the continued boom in online shopping. Here’s why.
As coronavirus cases fall across the nation and vaccines distribution speeds up, an economic recovery is on the horizon and one under-the-radar industrial stock might be the best way to play it.
TradingAnalysis.com founder Todd Gordon said this week that Shyft Group (NASDAQ: SHYF) looks poised to deliver further gains.
Shyft shares have been on a steady climb since hitting a bottom in mid-March 2020. Since then, the stock is up nearly 275%. And so far this year, it has gained 19%, 10% of that in the last week alone.
“They make and assemble specialty commercial and recreational vehicles,” Gordon said of Shyft. “They operate under two divisions, fleet services and specialty chassis and vehicles. The fleet services make commercial vehicles that are used as delivery trucks, servicing quite a few industries including e-commerce and last-mile package delivery. … The chassis division makes various chassis, most notably they do them for a diesel motor homes, which are in huge demand right now.”
Shyft has a market cap of $1.18 billion, and is expected to rake in nearly $675 million in sales in fiscal 2020.
The company’s fleet vehicles and services segment makes up around 61% of total revenue. Its backlog for its customized vehicles quintupled to $282 million in October from a year earlier, CEO Daryl Adams said in November on an earnings call.
With orders from parcel delivery companies like FedEx (NYSE: FDX) and UPS (NYSE: UPS) rising sharply over the last year amid a boom in online shopping due to the coronavirus pandemic, “customers have been asking us to fill them with urgency,” Adams added.
Gordon said Shyft’s fundamentals also look strong, with the stock trading at 20 times forward earnings, well below the Nasdaq’s 37 times multiple.
“The chart looks good,” Gordon added. “We came all the way from $2.61 low back here in 2016. And if we do a little bit of simple channel analysis… you can see that the company is respecting some support and resistance, generally moving higher in an uptrend channel.”
“We are a little overbought here, the move has been made, $22 or $23 would be a better entry here,” Gordon continued. “I do want to get involved because we do have a bit more upside until channel resistance is met into the mid to higher $40s, potentially even $50 depending on that angle of ascent. So, I like to get a partial position now in Shyft and look to add later.”
Shyft shares closed at $33.75 on Thursday. A possible $50 price target indicates as much as 48% upside for the stock from the current price.