Old Dominion Freight Line - Boasting a total return north of 1,200% over the last decade, less-than-truckload (LTL) hauling specialist Old Dominion Freight Line has smashed the market.
Almost exactly as it sounds, LTL hauling consists of picking up partial loads from multiple locations and delivering them to one or many drop-offs. While far more complicated than traditional truckload hauling, this complexity acts like a moat for Old Dominion. With nearly 11,000 tractors, 43,000 trailers, 24,000 employees, 255 service centers, and linehaul dispatchers and software needed to coordinate everything, successful new entrants to the industry are rare.
Equally as important for investors, Old Dominion's operations are best in class. Consider its profit margin and return on invested capital (ROIC) -- a measure of a company's profitability from its debt and equity -- compared to its LTL peers.
Thanks to this outsized profitability, Old Dominion decided to initiate a dividend in 2017 and has raised it by 284% in the years since. Though the company's dividend yield of 0.4% may seem diminutive, it only amounts to 9% of its net income -- leaving an incredible runway for future increases.
To top everything off, Old Dominion's price-to-earnings (P/E) ratio of 27 is well below the 40 level it often saw in 2022. Posting 43% earnings per share (EPS) growth through the first three quarters of 2022, Old Dominion looks more enticing than ever.
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