CHICAGO - Barrington Research analyst Walter Liptak raised his investment rating on the shares of truck and engine maker Navistar International Corp. from "market perform" to "outperform," calling the Warrenville, Ill. company a classic "early-cycle play" that will be among the first stocks to recover when the economy turns up, according to the Chicago Tribune.

As a maker of heavy- and medium-duty commercial trucks used primarily to deliver freight and manufactured goods, Navistar and its industry rivals have historically been subject to the economy's ups and downs. The truck sector's last cyclical peak came in 2006, but demand has plummeted since the recession began more than a year ago, and current conditions are the worst in several decades.

Less freight traffic, in combination with tight credit markets, has caused truck-fleet operators to hold off on new vehicle orders. But sooner or later, the replacement cycle grows in urgency. As Barrington's Liptak notes in his report, "the longer the downturn in the economy, the older the trucks become."

As trucks age they suffer more downtime and generate higher maintenance costs for fleet operators, and the analyst notes the average age of trucks on the road in the U.S. currently is about 6.2 years - the oldest fleet age since the early 1990s.

Because its once-insignificant military segment has been growing rapidly the last two years, Navistar has been able to offset the worst of the commercial-truck downturn with revenue from its production of Pentagon orders, particularly for a heavily armored vehicle used in Iraq, known as the MRAP.

Still, big profits for Navistar won't return until its flagship commercial-truck segment recovers. "There is no doubt that Navistar is a cheap stock," Liptak says, but with markets as unsettled and depressed as they are, the question is when that upturn will arrive.

For heavy trucks, the trough year may be 2009, he suggests.

Navistar Chairman and Chief Executive Dan Ustian has "properly positioned the company to take full advantage of the truck market recovery, which will be amplified in this cycle by a very old fleet age and impending [engine] emission standards," the analysts said in raising his rating.

While the time frame for the economy's eventual rebound remains uncertain, Liptak said, "investors can rest assured that Navistar is poised to be the first out of the gate once the North American economy turns."