Mad About Options: Test-Driving PACCAR: The Mad About Options crew reviews Jim Cramer's recent bullish comments about PACCAR and offers options strategies for traders and investors. Also hear options ideas for Aetna and Nordic American Tanker.
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Paccar , the maker of highly regarded Peterbilt and Kenworth trucks, is down almost 50% this year to 28 and now trades for eight times estimated '08 earnings. Paccar has a great balance sheet with about $6 a share in net cash. One of the risks with Paccar and makers of construction and farm equipment is their finance subsidiaries. Paccar had $9 billion of finance receivables at the end of the second quarter and analysts worry about a recession's impact and declining truck values. Equipment makers also could get squeezed as their finance subsidiaries raise loan rates to reflect higher funding costs.

Meanwhile, we have so little actual industry in the Nazz: Paccar (PCAR), Joy Global (JOYG), Steel Dynamics (STLD). It is almost as if they have to do all the real lifting because tech can't work.

What can I say. I like trucks and this too was undervalued.

Great company, many happy returns

Great Company!!

Paccar (PCAR) was upgraded to Neutral rating from Sell at UBS. Price target and FY 2008 eps estimates hold at $52 and $4, respectively.

Truck builder Paccar Inc., of Bellevue, said last week its board of directors authorized a $300 million stock repurchase plan.

The company also recently reported third-quarter net income of $302.3 million, or 81 cents per diluted share, which is down from net income of $403.6 million, or $1.07 per share a year earlier but above analysts' estimates.

The stock trades for 7.5x cash flow.

PACCAR announced its Board approved the buyback of $300 million of its stock. PACCAR has invested $978 million to repurchase 27.4 million shares.

PACCAR Inc has two principal industry segments: design, manufacture and distribution of light, medium and heavy-duty trucks, and related aftermarket distribution of parts (Trucks), and finance and leasing services provided to customers and dealers (Financial Services).

During the third quarter of 2007, PACCAR invested $249.7 million to repurchase 4.58 million of its common shares (adjusted for the recent 50 percent stock dividend).

These purchases complete the $300 million share repurchase authorization from its Board of Directors. PACCAR has invested $978 million to repurchase 27.4 million common shares in the last three years. “The share repurchase programs reinforce the fact that PACCAR is an excellent long-term investment,” said Mike Tembreull, vice chairman.

The company’s stock, including reinvested dividends, has outperformed the S&P 500 Index for the previous one-, three-, five- and ten-year time periods.

liked it, but way overvalued now

Great company, but the stock seems to have gotten way ahead of itself in this uncertain economic environment

weak demand