Why Arkansas Best Shares Trucked Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of trucking company Arkansas Best skyrocketed as much as 40% after disclosing in a regulatory filing on Friday that its subsidiary, ABF Freight System, had reached a tentative agreement with the Teamsters union.

So what: The negotiations of a long-term contract between Arkansas Best subsidiary ABF Freight and the Teamsters National Freight Industry Negotiating Committee have been going on for way too long. This filing appears to have paved the way for a five-year agreement between both parties that will allow ABF to continue its operations without having to shed 15%-20% of capacity as some analysts had feared, and gives better certainty to union members that they aren't going to lose their jobs. In response to the deal being reached, Deutsche Bank upgraded Arkansas Best to buy from hold as it sees much of the uncertainty in the company now removed.

Now what: Although I'm not a shareholder in Arkansas Best, it is a holding in my "One Person's Trash Is Another Person's Treasure" portfolio, and I can firmly say, "Finally!" This deal has been a long time coming and it should practically guarantee a return to profitability for Arkansas Best. This is great news for shareholders who continue to enjoy the $0.12 annual dividend and even more reason to like the stock moving forward.

Craving more input? Start by adding Arkansas Best to your free and personalized Watchlist so you can keep up on the latest news with the company.

Will this stock continue trucking higher?
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The article Why Arkansas Best Shares Trucked Higher originally appeared on Fool.com.

Motley Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.