Cargojet Inc (CJT.TO)

A very neat model in Canada. Their competitive position is very, very strong. However, part of the issue is that it is a business that had quite a bit of growth and very high embedded expectations. It takes a while for a company to grow into that. Over a long period, the stock has done quite well. He likes how they think about the business and are very well positioned to be able to add on incremental volumes at relatively low incremental costs, which gives a good drop-through into the business. It is very hard for someone to break into the business. Over time they are going to be able to generate quite a bit of cash as their fleet requirements wind down. Dividend yield of 1.6%.

Not the most liquid stock in the world which, combined with the summer doldrums and trading volumes drying up in August, might be part of the reason for volatility. It has been a well executed story over the last number of years, and has benefited from increased ordering online.

It was a Top Pick recently. He toured their airport. Most take offs between 10 and midnight are theirs and he was there to see that. He was struck by how long their employers have been there. He likes that and the stability and the business. They have contracts for Purolator, DHL and Canada Post. 90-95% market share. They have leased out 90% of their capacity. There is considerable upside on their share price.

They have high barriers to entry. It is a virtual pipeline in the sky. The stock is quite pricey now, however.

This has gone up significantly over the last couple of years. A really well run business. It is in a monopoly-like position. With the advent of Amazon (AMZN-Q) and people ordering more things online, they have a really good, strong position and growth area. He really likes the company. Management is excellent. Fairly valued, but if earnings keep going up, the stock will continue to do well.

They effectively have a natural monopoly in overnight cargo in Canada. Any time you get something shipped, but doesn’t come from the same city you are in, he can almost guarantee it is shipped by this company. He likes the high barriers to entry. They have a 95% market share in Canada with customers such as Canada Post, Purolator, Amazon, and virtually anyone that ships, including Air Canada. A great little company that is not very well known by the street. Trades at about 6X EV to EBITDA, compared to the trucking companies at 7.5X. Dividend yield of 1.7%. (Analysts’ price target is $56.)

(A Top Pick Feb 7/17. Up 2%.) This owns the Canadian overnight delivery cargo market. They recently got the Canada Post contract. It is a play on e-commerce. Trading at a reasonable valuation and recently bumped their dividend.

This stock has gone up a lot in a short period of time. The company has done a great job revamping its fleet to meet the huge Canada Post contract. Feels it is fully valued now, and would buy it on weakness. Basically has 90% of the overnight air cargo market in Canada.

A very well-run company and very dominant, because they basically have a lock on the Canadian market for time sensitive airfreight. They’ve been able to get more and more contracts, build on the network affect and reinvest in better capacity. Not as cheap as it was, but generates a healthy amount of cash flow, particularly as they get past the final plane refreshes. Dividend yield of 1.6%, which will grow.

This has 90% market share in Canada for the large, overnight, time sensitive freight. Their customers include Canada Post, DHS, UPS and Amazon, so they have a stranglehold on the industry. Carries time sensitive cargoes, with pharmaceutical being a big product area. It has a huge barrier to entry. All the big CapX has been done. Dividend yield of 1.48%. (Analysts’ price target is $57.)

Recently added a small position to his portfolio. He is quite impressed with management. They have 90% market share in Canada. A nice play on Internet growth as people use the Internet for shopping. Results will be coming out shortly, and there should be decent sized results from the Christmas season.

This moves 90% of overnight cargo business in Canada. They have Canada Post, Air Canada and are beginning to grow outside of Canada as well, with routes to Europe and Latin America. Well run with a very strong free cash flow yield. Not a cheap stock. Dividend yield of 1.52%. (Analysts’ price target is $55.60.)

Facilitates cargo transportation across Canada, mostly at night. There are rules in Canada as to what the large US companies can do. If you want something to go from Toronto to Vancouver, it will be this company that will probably do it. They have grown their business with UPS, and have one business with Canada Post. An excellent company and well-run.

He did not buy it after looking at it last year and regrets it. They are reequipping themselves with the proper airplanes for overnight delivery. They had to incur a lot of Cap-x spending and debt. The stock is pricey right now so he would take profits.

(Market Call Minute.) This has been on fire lately, and probably goes higher for a little longer. However, get ready to Sell.