We came across a bullish thesis on Heartland Express, Inc. (HTLD) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on HTLD. Heartland Express, Inc. (HTLD)'s share was trading at $10.64 as of Feb 21^st.

A medium-duty delivery truck on a road between two cities, symbolizing the company's commitment to transportation.

Heartland Express has shown a sequential improvement in operating income, though it has yet to achieve GAAP net income. Management attributes this progress to better integration of its recent acquisitions and an improving freight market, reinforcing the thesis that the great destocking cycle is finally coming to an end. During the two-year bear market, HTLD executed two strategic acquisitions and has aggressively paid down $295 million in debt, including $100 million in the last 12 months. While some leverage can be beneficial in an inflationary environment, HTLD’s management is committed to a debt-free balance sheet, positioning the company as a survivor and opportunistic acquirer in downturns. This disciplined approach has historically allowed HTLD to make value-accretive acquisitions while competitors struggle.

The market has yet to fully recognize HTLD’s ongoing operational improvements, but the turnaround is already underway. It remains uncertain how many more quarters of sequential improvement will be needed before investors take notice, but the company’s trajectory suggests significant upside. If historical logistics sector valuations hold, HTLD could be a three-to-four bagger from current levels, as trucking companies frequently trade at 2.5x to 3.0x price-to-sales multiples. At the current pace of debt repayment, HTLD is on track to be debt-free within two years, setting the stage for a return to share buybacks, which could further drive shareholder value. The improving freight environment, combined with a clean balance sheet and strategic positioning, makes HTLD a compelling investment at current prices. With continued execution, the stock could reach $38.24 by the end of 2026, offering investors a highly attractive risk-reward profile.

Heartland Express, Inc. (HTLD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 19 hedge fund portfolios held HTLD at the end of the third quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of HTLD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HTLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.