TFI International Inc (TFII.TO)

A free cash flow machine. The trucking Index in the US is at a 52 week high, and this company hasn’t followed, because they had put a Dutch auction to buy back $200 million of stock up to $22. It capped a little, and you are now seeing it drift over $22. Of the $200 million, only $60 million was tendered, which means a) the company’s $22 was a very opportunistic price and b) shareholders thought it was a very low price, so he feels it is probably worth more than $22. At the same time, they are investing quite a bit in "last mile", developing a relationship with Amazon (AMZN-Q), which is taking over the retail world. Has one of the best COs in Canada. Dividend yield of 3.08%.

Trucking, courier and hauling large equipment in the oil country, which has not been a good part of their business. Did an exciting deal by selling their waste management business. They now have a big cash collection where they are planning to do a Dutch Auction for some of the shares, which they will use to reduce debt. Trucking has been tough in Canada, but he is seeing data of improving truck tonnage in the US, where they have a lot of exposure. Also, has big exposure to Google (GOOG-Q) and Amazon (AMZN-Q), and is involved in same day shipping with a lot of online retailers. An interesting way to play on-line growth over time. Pays a nice dividend. Trading at around 10-11 times earnings, and it is undervalued.

The selling of their garbage assets out East made perfect sense, so it is now just a pure play on trucking. Doesn’t think the market is punishing them because of the sale of their asset. Trucking stocks have all come down, because of the fear that the US and Canadian economies are rolling over into a recession, especially here in Canada. People believe that volumes are coming down and that there is excess capacity in the US. Since half of their revenues come from that, there are fears that rates will start to come down. There have been talks about pressures over the last while. This is probably a good bet right now at this lower valuation.

Theoretically lower fuel prices are supposed to help these companies. The chart is showing a breakdown with lower highs and lower lows since early 2015. There is some hope as some of the lows seem to be holding. Pay a lot of attention to the last peak of around $25-$26, which might be a point of target if the market rallies the way he thinks it might over the next 2-3 weeks.

Very little organic growth on this, and not cheap relative to its peers. He still models pretty good dividend growth. Leverage is a little high right now, so they are probably not making acquisitions. Spun out their waste business, which brings their debt levels down to a more reasonable place. Not cheap relative to its peers.

(Top Pick Feb 4/2015, Down 17.59%) He still likes the story. They have firmed up margins. We need a little more growth in the economy.

He is a believer in this company. They have done very well in consolidating the “less than truckload” cartridge industry in Canada. Stock took a bit of a hit in the 3^rd quarter like everybody else, but is now coming back a little. Low fuel prices are to their advantage. Thinks there are more acquisitions out there for them.

They sold their waste management division so they could focus on their trucking business which is where they make the bulk of their money. The fact that they sold a distraction and freed up cash makes sense to him as a shareholder. He continues to buy for new clients. 35% revenue in the US and 65% in Canada. It has not done much this year, but he felt the valuation was reasonable. Right now he feels people are just taking profits.

A very well run company and it generates lots of free cash flow. Last year they used half their cash flow to buy back stock. It looks attractive. In ’08 when the economy slowed down they got hit hard, so he worries what will happen in this slowdown. Wait until we know we are not in a recession.

Likes this company, primarily on valuation. ROE is at around 15%. PE of about 16. Beat their last quarter by about 27%. Yield of 2.9%.

A cross-border trucking company, and with gas prices being as low as they are, they will benefit. Also, with the Cdn$ coming down as much is it has, it encourages cross-border shipping to take place. They have been busy doing acquisitions which have put downside pressure on the share price. Attractive valuation. Trading at 15X. Good dividend yield of 2.70%.

Technically this is not looking too good. It is in a downward trend and is underperforming the TSE Composite and currently trading below its 20 day moving average. This is not an attractive opportunity technically. It has long term support at around $22, and we are not too far off of that. Wait for it to test around the $22 level and show signs of bottoming.

They have expanded and done very, very well in terms of their fleet acquisition. He is not all that enthusiastic about transport, particularly in Canada. One of the things that should be positively affecting them is the cost of diesel, which has been a big wind at their back. This has not affected their stock price as much as he had expected. He would want this to be a lot cheaper before he looked at it. Such as 5X EBITDA. Their core operating profit has been out West which is going to get hurt.

Mostly East West business, but some North South. It was sold off because of Alberta and a lack of pickup in manufacturing in Ontario. They acquired a number of companies and have become the premier trucking company in Canada. It is cheap, down about 14% and you can buy it while it is down.

Continues to buy this for new clients. Has pulled back meaningfully from the beginning of the year. They always have a lousy 1^st quarter, weather related. Sees them selling off their waste division and looking to split the company into 2 or 3 parts. That could realize value. Recently got contracts with Google and Amazon for same day delivery in New York and some Canadian cities. Generates a lot of free cash flow, which is being used right now to buy back stock.