Nowadays, with more and more people driving oversized SUVs, I feel like I'm being shoved around by big bullies in my little sedan. To boost my self confidence, I enjoy mocking the drivers of Hummers for their lack of economic sense when they shelled out an average person's annual salary to purchase a gas-guzzling 9-mile-per-gallon big-boys toy. But secretly, I admire their pride as they look down upon everyone else from their high seats. The way I see it, there is only one way to get back at these snobbish pricks — buy something bigger than a Hummer. But herein lies the problem. There are no other passenger vehicles bigger than a Hummer. You can get a bus or an RV but you'll just have a hard time finding a parking spot.

So, this past weekend, while searching for some good stocks, I found a solution to my problem — a truck! Yes, I know, that's ridiculous. But, I'll let the picture below do the talking...

Imagine the possibilities. If you were driving home from work, and you felt a little sleepy, just pull up on the side of the street and doze off in the luxury cabin furnished with a TV. Or if you are hungry, drop a cheese macaroni in the microwave and two minutes later you'll be enjoying a hot meal in the comfort of your cockpit. And the extra bonus? You get to look down at your fellow Hummer drivers and see what kind of pants they are wearing for the first time!

At Least Consider The Stock
Still not convinced? Fine. At least you should consider buying the stock. The luxury sleeper cabin you saw earlier is top of the line truck from the famous truck manufacturer Peterbilt. That's right. If you drive a truck or buy trucks for your employees, you probably know I'm talking about Paccar (NYSE: PCAR).

Paccar is every bit as good looking as the the Unibilt Sleeper cabin. For the past 66 consecutive years, the company has never lost a dime. And the company has paid dividends every year for the past 64 consecutive years. This past decade, the company paid 11 extra bonus dividends on top of the regular dividends it pays. Now, of course paying regular dividends alone is not enough. But when Paccar manages to increase quarterly dividends by 181% in the last six years, that's just outstanding. If this is not management consistency, I don't know what is. And best of all, the Pigot family, who founded Seattle Car Mfg. Co. back in 1905 which later became Paccar (short for Pacific Car and Foundry Company), still has family members managing and holding sizable stakes in the company today.

What About Competition?
Despite Paccar's excellent numbers, Paccar is not the #1 player in the trucking industry; Daimler Chrysler is (NYSE: DCX). Paccar is #2 behind Daimler. But Daimler also has its hands dirty in the auto industry. So Paccar is more focused. Besides, compare Daimler's numbers to Paccar's and it'll be very obvious who's doing better. After Paccar, there are other competitors such as Volvo (NasdaqNM: VOLVY) and Navistar International (NYSE: NAV). Both Volvo and Daimler are selling at a huge premium.

Navistar is, however, selling at a dirt cheap price. But, Paccar has strong brand names and more than 60 years of excellence to back it up. In addition, more than half of Paccar's revenues come from outside US. Because the trucking industry is, like the auto industry, a cyclical industry Paccar will not get hit as bad when the industry goes south. But, Paccar will not do as well as its competitors when the market skyrockets either. That's the cost of diversification. Considering Paccar has been doing so well, I can live with that. I think the chart below best sums up the competition between Paccar and Navistar.

How About A Little More Icing On The Cake?
Still not convinced about the stock? The stock has outperformed the S & P 500 for the past ten years. This year the stock is no exception from the beating the market has taken. Currently, Paccar trades at $67.89/share about 22% below my estimate of its fair value. Analysts expect Paccar to earn $6.75/share a 30% increase over earnings per share last year. And I believe Paccar is well positioned to meet if not beat analysts' estimates.

From January to August this year, Paccar has been actively buying back shares. To date, they have purchased 4.6 million shares at $315 million which brings the average cost per share to $68.48. Evidently, management believes the stock is currently undervalued. Even so, I am hoping the price will drop a little further to give us a little more margin for error. As always, don't believe a single word I say as I'm no Warren Buffett. Do your due diligence and give me credit when you become a millionaire 40 years later.

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