Paccar: Capitalize on the Truck Replacement Cycle

What's more, Paccar should receive an added tailwind during the 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. Manufacturing cost cuts and widening margins add to the positive story.

The First Call FY2010/FY2011 EPS estimates for PCAR are $1.02 to $2.32. Each EPS estimate appears to be about 10% low, according to my analysis.

Technically, as noted Paccar's shares pulled-back this spring, but the stock has since found support at/near $30, and moved back above the key, 50-day moving average.

2010 Outlook: I view Paccar as a long-term play, but if investors are looking to sell PCAR within the year, it's probably best to take your profits after it rises to $52-54, if it fails to rise above $55.

I'd also raise the sell/stop loss to $31 from $17, making this a zero-risk trade for your July 2009-bought shares.

Stock Analysis: I consider Paccar Inc. 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 August 2010 and I'd put a sell/stop loss at: $31.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.