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Despite Tough Times for Freight, Knight Keeps on Trucking

With exposure to potentially volatile fuel and labor costs, and steadily increasing regulatory oversight, the trucking industry has increasingly turned to consolidation to defend its profits. The


With exposure to potentially volatile fuel and labor costs, and steadily increasing regulatory oversight, the trucking industry has increasingly turned to consolidation to defend its profits. The best example of this strength-through-size approach is Knight-Swift Transportation Holdings (NYSE: KNX) which was created through a merger in 2017. For long-term shareholders willing to withstand the near-term pain of a mini trucking apocalypse, Knight-Swift could present a lot of upside if the new company can justify the valuation level that its components enjoyed before the merger. Reaching those past levels would translate to a share price more than 30% higher than today's – but Knight still has miles to go to reach that goal.

Knight-Swift has a long road ahead to reach its ambitious goals. Image Source: Getty Images.

At nearly $7 billion, Knight boasts the biggest market capitalization of any pure-play US highway freight company. Born out of the merger between market leaders Swift and Knight in 2017, the combined company now operates close to 19,000 trucks and nearly 60,000 trailers in North America according to the most recent 8-K. Knight's share price has surged by 26% so far in 2019, while remaining nearly 30% below the highs achieved in spring of 2018, when US tariffs on Chinese industrial and consumer imports began to take effect, sending transport shares lower along with industrials and materials

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Source Fool.com

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