Will road-wary investors pull into truck stocks?

• Author: Mildenberg, David
• Position: Trucking industry - Industry Overview

Since the election is just down the road and a good buddy of business is anxious to spend another four years behind the wheel at the White House, only the deeply depressed doubt that 1992 will pass without a modest recovery.

For that reason alone, some analysts say, it makes sense to traffic in trucking stocks, typically winners when the economy warms up and losers when things wind down.

Since McLean Trucking Co. of Winston-Salem went bankrupt in 1987, Tar Heel trucking investors have concentrated on Carolina Freight Corp. of Cherryville, the nation's fourth-largest common carrier, and Chapel Hill-based Kenan Transport Co., which attracts little investor interest because of its size (about $50 million in annual revenues). But thanks to two wily brothers in High Point, there's a new alternative.

It's Old Dominion Freight Lines Inc. (ODFL-NASDAQ), which went public Oct. 24 at an initial price of $12.50. CEO Earl Congdon, 60, Vice Chairman John Congdon, 58, and their families walked away from the IPO with about $9.3 million of the $25 million raised. The balanced pared the company's long-term debt to less than $10 million. The stock settled into the $14-$15 range, where it was trading in late November.

"They're making money," says Neal Kaplan, an analyst with Scott & Stringfellow in Richmond, Va., "and they've been making a little more each quarter for a couple of years, which is pretty unusual in this economy."

An IPO by a less-than-truckload carrier also has been a rare thing in recent years, notes Wesley Frye, Old Dominion's chief financial officer. The LTL market, which has much higher costs than the non-stop manufacturer-to-market truckload sector, is dominated by such giants as Consolidated Freightways, Roadway Express, Yellow Freight Systems and Carolina Freight.

Founded by Earl Congdon Sr. in Richmond, Va., in 1934, Old Dominion moved its headquarters to High Point in 1962 after blocking a Teamsters union organizing campaign. It entered the truckload business with its 1979 acquisition of Birmingham, Ala.-based Deaton Inc. Running two types of operations never paid off, and Old Dominion sold Deaton in September. About the same time, it shut down its furniture-hauling division.

"The truckload subsidiary didn't fit in with our story," Frye says. "We closed the furniture division because it was losing maney and it didn't make sense to keep it open."

Both moves eliminated about $65 million a year in sales and left Old Dominion with its...