Hub Group (HUBG): Share price cycling through bullish 'flag'

Posted Feb 20th 2008 2:53PM by Larry Schutts
Filed under: Earnings Reports, Analyst Upgrades and Downgrades, Technical Analysis, Stocks to Buy

Hub Group (NASDAQ: HUBG) is a leading freight transportation management company, specializing in cost-efficient intermodal methods. Goods are taken to and from Hub operating centers by truck and carried between centers by rail. The company operates a network of over 30 centers throughout the United States, Canada and Mexico. It also provides truck brokerage and logistics services involving shipment optimization, load consolidation, mode selection, carrier management and load planning.

The company pleased investors earlier in the month, when it reported Q4 EPS of 43 cents and revenues of $445.5 million. Analysts had been expecting 37 cents and $426.6 million. Management also guided FY08 EPS to the range $1.50-$1.62 ($1.57 consensus). Bear Stearns subsequently reiterated its "outperform" rating on the issue and boosted its price target to $40.

The share price popped through 200-day moving average resistance on the news and then passed into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers recommend the shares with three "strong buys", two "buys" and four "holds". The HUBG Price to Sales ratio (0.73), Price to Free Cash Flow ratio (17.14), EPS Growth rate (26.47%), Return on Assets (12.25%), Return on Investment (19.36%) and Return on Equity (23.46%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $22.63 and $39.39. A stop-loss of $28.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.

Tags: flag, fundamental analysis, FundamentalAnalysis, Hub Group, HUBG, HubGroup, momentum, technical analysis, TechnicalAnalysis