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Some plays just exude optimism and signs of higher earnings up ahead. Truck manufacturer Paccar Inc. (PCAR), which I first wrote about on July 6, 2009 at a price of $30.81, is one.Paccar's revenue should increase about 10-13% 2010, after bottoming in 2009, as economies in North America, Europe, and in emerging markets continue to recover.
Further, Paccar should receive an added tailwind during the next economic expansion from more-strict environmental regulations: those more-rigorous emission standards will encourage companies to replace at least some trucks ahead of schedule. The North American market should lead the emissions standard sales cycle.
The First Call FY2010/FY2011 EPS estimates for PCAR are 89 cents to $2.07. Each EPS estimate looks about 10% low, according to my analysis.
Technically, as expected, the late 2009 pull-back in Paccar's stock, which basically doubled in 2009, proved to be profit-taking, as the stock in early 2010 has since resumed its uptrend, and cleared psychological resistance at $40.
2010 Outlook: I view Paccar as a long-term play, but if investors are looking to sell PCAR within the year, I wouldn't purchase the shares, as the one-year risk/return is not favorable.
Stock Analysis: I consider Paccar to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in PCAR now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my PCAR position before April 2010 and I'd put a sell/stop loss at: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2010/FY2011 EPS estimates for PCAR are 89 cents to $2.07. Each EPS estimate looks about 10% low, according to my analysis.
Technically, as expected, the late 2009 pull-back in Paccar's stock, which basically doubled in 2009, proved to be profit-taking, as the stock in early 2010 has since resumed its uptrend, and cleared psychological resistance at $40.
2010 Outlook: I view Paccar as a long-term play, but if investors are looking to sell PCAR within the year, I wouldn't purchase the shares, as the one-year risk/return is not favorable.
Stock Analysis: I consider Paccar to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 25% position in PCAR now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 50% of my PCAR position before April 2010 and I'd put a sell/stop loss at: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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