Tickers in this Article: FFEX, MRTN, KNX, JBHT, ABFS
Despite the terrible business environment the trucking industry is facing, Frozen Food Express (NASDAQ:FFEX) is a neat little play on the recovery of both the economy and the trucking industry. This company is one of the leading temperature controlled truck carriers in the United States. The company was started in 1947 with a fleet to 2 army surplus trucks. Today, the company has over 1600 and nearly 400 owner operated trucks.

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Don't Expect Miracles
While the economy appears to be on the mend, it appears that any recovery will be slow and with hiccups along the way. The trucking industry will be no different. In fact, it could be worse. Any full recovery will likely not be to the capacity levels that we had in 2007. Nevertheless, Frozen Food Express is trading at a price that may already discount all of these industry troubles. At $3.40 a share, or a value of nearly $60 million, FFEX is trading at a 50% discount to tangible book value.

To be sure, shareholder's equity today is $90 million versus $106 million in 2008. This equates to a BV per share of around $5 versus today's stock price. Moreover, FFEX is debt free and has $3.7 million in cash. In an industry as capital intensive as trucking, this pristine capital position is a huge advantage. Notably, the company's Depression era roots created a culture of debt aversion beginning with its founders and still followed today.

Can't Do Without Trucks
Until someone finds a way to deliver goods without using roadways, trucks will always play a vital part in today's society. Of course, that doesn't mean that we can't function with fewer trucks and fewer trucking miles. That decreased condition appears to be the dark cloud over the industry today. Still, FFEX delivers products like meat, produce, pharmaceuticals, and other perishable products that will continue to face growing demand over the years.

The company is not without competition. Marten Transport (NASDAQ:MRTN) is another temperature controlled trucking company that has no net debt. Marten currently remains profitable while FFEX reported a loss for the full year and fourth quarter of 2009. As a result, Marten trades at 1.5 times book versus two-thirds book for FFEX. If FFEX can turn its fortunes around, it too should justify a multiple of at least book value, which would require a 50% rise in the stock price. (For more, check out Digging Into Book Value)

A quick glance at other major trucking names like Arkansas Best (NASDAQ:ABFS), Knight Transportation (NYSE:KNX), and big daddy JB Hunt (NYSE:JBHT) reveals P/B ratios of 1.3, 3.2 and 7.01, respectively. Despite reporting profitability, FFEX current price and discount to book more than compensate the patient investor.

Time is Your Friend
With quality management and a strong balance sheet, time works to an investors advantage in the case of FFEX. Despite a 2009 loss, management reduced operating expenses by nearly 20% in 2009 and maintained a impeccable balance sheet. Such characteristics often have a way of rewarding investors. (For more, check out Finding Profit In Troubled Stocks.)

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