Truck manufacturer Paccar was Tuesday's pick for the IBD 50 Growth Stocks To Watch. Paccar stock is in the 5% buy zone of a flat base and hit a new high on Monday.
Paccar designs and manufactures light, medium and heavy-duty trucks under Kenworth, Peterbilt and DAF brands. It also makes diesel engines, provides financial and information technology services to its businesses and distributes truck parts. Paccar sells its products in more than 100 countries via 2,200 locations.
The company recently began construction on its new 240,000-square-foot parts distribution center in Germany, scheduled to open in 2024. Paccar expects the new center to improve parts delivery in the region.
On Tuesday, Paccar declared an extra cash-dividend of $3.20 a share to shareholders of record as of the Dec. 15 close, to be paid on Jan. 4. This is in addition to the regular quarterly 27-cent cash dividend to be paid on March 6. That regular dividend also was declared on Tuesday.
Paccar Stock Taps A New High
Paccar stock is near the top of a buy zone out of a flat base. The zone reaches to 94.55 from a 90.05 buy point, according to MarketSmith pattern recognition.
Shares popped 4.3% in heavy trading following the company's third-quarter earnings report on Oct. 24. The stock couldn't maintain the higher level and started a pullback the next day. Paccar stock traded under its 50-day moving average until reclaiming it on Nov. 3.
Paccar stock gapped up 3.1% and broke out of the base after hitting the buy point on Nov. 14, as industrial stocks rallied on softer-than-expected October inflation numbers. Paccar continued to climb and reached an all-time high in heavy volume on Monday. Shares have gained 42% this year so far.
Earnings Growth Continues
Paccar reported higher-than-expected third-quarter earnings and sales on Oct. 24. Its quarterly profit grew 59% but decelerated from robust 70% and 96% increases in the prior two quarters.
Third-quarter revenue grew 23%, which lagged the 24% and 32% in the prior two periods. Sales got a lift mainly from higher truck and parts sales.
The company expects retail sales of 295,000-315,000 truck vehicles in 2023, then rise to a range of 260,000-300,000 vehicles in 2024, as outlined in its earnings report. Paccar is bolstering its investments in fuel-efficient diesel and electric technologies, autonomous systems, connected vehicle services and next-generation manufacturing.
The company boasts 84 consecutive years of profitability. Analysts project full-year 2023 earnings growth of 57% and a 17% drop next year, according to MarketSmith data.
Paccar stock has an IBD Accumulation/Distribution Rating of B, meaning institutions have done moderate buying over the last 13 weeks. In addition, IBD Mutual Fund Index name Fidelity Contrafund added shares in the September quarter.
Lastly, shares hold a high 97 IBD Composite Rating and a respectable 94 EPS Rating.
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