This week’s Stock of the Week designs and sells specialty trucks that make sure consumers get what they ordered.

Trucking Along

Spartan Motors, Inc. (SPAR) manufactures and sells the specialty trucks that make a lot of commerce, including e-commerce, possible. These are the trucks that do last-mile delivery—from railway cars, giant shipping containers or centralized warehouses—to businesses and consumers’ homes. They may be side-opening trucks, refrigerated trucks or whatever fleet operators—Spartan’s customers—need to get their products where they need to go.

Spartan is a small-cap company that is tightening its business focus. It is getting out of sectors that did not fit its core mission and has expanded in the specialty-truck line by acquiring its longtime customer, Smeal, a maker of fire trucks. Spartan’s margins, traditionally low, are now improving significantly, and earnings growth should accelerate during the next year or two.

A significant economic downturn would hurt truck sales, but the growing need for trucks to bring Web purchases to consumers, added to Spartan’s manufacture of emergency-response vehicles and their parts, should protect the firm somewhat even then. Revenue was $707 million last year and is likely to grow to $805 million this year and $897 million in 2019. The small dividend of $0.10/share/yr. recently yielded 0.7% and appears secure.

Fiscal year: December. Earnings per share: 2019 est./$1.08…2018 est./$0.64…2017/$0.43.

Tim Kang is senior vice president and senior research analyst at Olstein Capital Management, Purchase, New York, where he chooses stocks for the $682 million Olstein All Cap Value Fund (OFALX) and $106 million Olstein Strategic Opportunities Fund (OFSAX). OlsteinFunds.com

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