Rush Enterprises Sees A Pickup In 18-Wheelers

By Gene G. Marcial

It Keeps on Truckin
Although heavy trucks were in a nasty slowdown, Rush Enterprises (RUSHA ), the top publicly traded dealer in Peterbilt 18-wheeler trucks in North America, boosted both its sales and earnings in 2002 and 2003. (They cost an average of $100,000 and come equipped with such amenities as a bed and a TV.) Its stock has roared -- from 4.19 last May to 11.95 on Mar. 3. Why? Rush reduced the cyclicality in its business by boosting its parts, service, and body-shop units -- operations that produce superior margins, says Douglas Col of investment firm Morgan Keegan. And Rush expanded its presence in the booming Sunbelt.

So Col has upgraded his rating on the stock from market perform to outperform. He adds that the "improving industry fundamentals will keep earnings growing." Bruce Geller of investment manager Dalton Greiner Hartman Maher, which owns shares, notes that pent-up demand for trucks should boost Rush, which operates 39 centers in nine states that offer one-stop services for truckers' needs. "Right now, we are at the beginning of a sharp up-cycle," says Geller. He figures Rush will earn 80 cents to 90 cents a share in 2004 and $1.15 to $1.30 in 2005. He sees a big jump in the stock in 12 to 18 months.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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