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He may have gone astray in the shake-up of the Brett Kavanaugh saga or the New York Times bombing about the Trump family's financial dealings, but investors sighed with relief on October 1 when the president Trump announced a new agreement under which Canada should replace the North American Free Trade Agreement.
Trucking Companies XPO Logistics
XPO, -1.80%
and C.H. Robinson in the world
CHRW, -0.27%
are among the biggest beneficiaries of the transaction, said Bill Barker, senior manager of the Motley Fool Small-Mid Cap Growth Fund
TMFGX, -1.12%
with Charles Travers.
XPO Logistics
XPO was the largest fund of the Motley Fool Growth Small and Mid Cap Fund as at September 30th. It accounted for 7.7% of a relatively concentrated portfolio, usually consisting of 40 to 45 shares. CEO Bradley Jacobs took control of Express-1 in 2011 and renamed XPO Logistics before making the new extended company public in 2012.
XPO, based in Greenwich, Connecticut, has experienced continued expansion through a series of acquisitions. Its annual turnover is approximately 17.6 billion USD, against 177 million USD in 2011. The company operates in many areas of transport (including freight brokerage). , Logistics and Supply Chain Management.
XPO sales (adjusted for acquisitions) are expected to increase by 14% in 2018 and 8% in 2019, and its adjusted net earnings per share (EPS) by 42% this year and 26% in 2019, according to consensus estimates. analysts surveyed. by FactSet. Stocks returned 22% this year, outperforming the S & P 500 Index.
SPX, -0.55%
10% back.
In an interview, Oct. 4, Barker said the new trade deal between Trump and Mexico and Canada included few substantive changes likely to affect the trucking industry, meaning that "everything the world can return to normal life. " He was excited for the announcement made on Oct. 3 by the company. it would deploy 5,000 "smart robots" to assist its logistics employees in various logistics facilities. In July, Bryan Hinmon, a Barker colleague, called XPO a "technology company disguised as a trucking company," describing his competitive advantage.
Motley Fool Asset Management
Barker referred to reports released last year that Home Depot
HD -1.24%
and Amazon.com
AMZN, -1.04%
could enter a bidding war to prevent XPO from acquiring. Of course, this has not been the case and one wonders why Jacobs of XPO would sell such a dynamic company in the middle of an incredible growth cycle. XPO's technological advantage "positions them well … for automated trucking," said Barker, while being careful to not predict how long it would take for automated trucking systems to have a major impact on the market.
During the conference call on the company's first-quarter earnings on May 3, Jacobs said he expected "a large acquisition or two medium-sized acquisitions." [to be] announced at the end of this year. "
At the call of the second quarter, August 2, Jacobs resumed his previous comments, stressing his patience: "We are disciplined. We will only enter into an agreement when we have an agreement that will create immense value for shareholders. And the reason we think patience is that if we continue to grow EBITDA [earnings before interest, tax, depreciation and amortization] in the range of 15%, 16%, 17%, 18%, with the leverage we have on the balance sheet, then taking free cash flow and repaying the debt, every dollar paid back creates a dollar of equity, "he said. I said.
Nevertheless, the domestic trucking industry is "incredibly fragmented," even as it consolidates, Barker said. So it's reasonable to expect Jacobs to stay.
C.H. Robinson in the world
C.H. Robinson Worldwide is a smaller stake in the Motley Fool Small-Mid Cap growth fund and is not as diversified as XPO. But the presence of so many small operators in the national trucking industry plays to its advantage in freight brokerage.
According to Barker, 185,000 US companies have one to five trucks and 22 companies with 4,000 people or more.
"If you're on the highway, open your eyes and see how many trucks there are and how many brands you recognize, such as JB Hunt, Swift and XPO, who bought Conway, and many who are not. not marked, "he said. .
In its 2017 10K Annual Report, CH Robinson stated that it "used approximately 73,000 contracted transportation companies, including highway carriers, railways (primarily intermodal service providers) and air and marine carriers in Canada. 2017 ".
The company based in Eden Prairie, Minnesota, is expected to increase its sales by 13% this year and by 5% in 2019, with a forecast EPS of 25% this year and 11% in 2019.
Barker described the freight brokerage industry as "cyclical" and added, "It's good at two different times: when there are not enough trucks for too much merchandise and when there are too many for whom is not enough. "
He described the current market as "quite tense", with "strong demand because of the strength of the economy and the beginning of the holiday season".
"It's a good time for truckers," he added.
C.H. Robinson Worldwide shares rose 11% this year.
Other truckers and shipping companies
Below is a snapshot of the S & P 1500 Composite Index shares that FactSet places in the trucking or airfreight / courier industries, plus XPO, with estimates of EPS sales and growth based on consensus estimates among analysts surveyed by FactSet. The two companies Barker talked about are listed first, the others being listed in alphabetical order:
| Company | Teleprinter | Total return – 2018 to 4 October | Projected Evolution of Sales – 2018 | Projected Evolution of Sales – 2019 | Projected Change in EPS – 2018 | Projected Change in EPS – 2019 |
| XPO Logistics Inc. |
XPO, -1.80% |
22% | 14% | 8% | 42% | 26% |
| C.H. Robinson Worldwide Inc. |
CHRW, -0.27% |
11% | 13% | 5% | 25% | 11% |
| ArcBest Corp. |
ARCB, -11.55% |
34% | 9% | 6% | 45% | 7% |
| Holdings Atlas Air Worldwide Inc. |
AAWW, -3.97% |
6% | 24% | 11% | -20% | 3% |
| Expeditors International of Washington Inc. |
EXPD, -0.37% |
13% | 15% | 6% | 18% | 6% |
| FedEx Corp. |
FDX, -1.26% |
-3% | 9% | 5% | 4% | 16% |
| Forward Air Corp. |
FWRD, -2.88% |
23% | 20% | 6% | 8% | 13% |
| Heartland Express Inc. |
HTLD, -2.36% |
-20% | 4% | 3% | -11% | 16% |
| Hub Group Inc. Class A |
HUBG, -1.09% |
-8% | 6% | -ten% | -36% | -1% |
| J. B. Hunt Transport Services Inc. |
JBHT, -0.52% |
6% | 20% | 11% | -13% | 20% |
| Knight-Swift Transportation Company Inc. Class A |
KNX -2.19% |
-25% | 121% | 6% | -47% | 18% |
| Landstar System Inc. |
LSTR, -1.31% |
13% | 27% | 5% | 44% | 7% |
| Marten Transport, Ltd. |
MRTN, -2.33% |
2% | 11% | ten% | -41% | 21% |
| Old Dominion Inc. Freight Line |
ODFL, -1.68% |
18% | 20% | 8% | 23% | 11% |
| Saia Inc. |
SAIA, -4.19% |
1% | 19% | 9% | 11% | 18% |
| United Parcel Service Inc. Class B |
UPS -0.06% |
1% | 9% | 6% | 29% | 9% |
| Werner Enterprises Inc. |
WERN, -2.65% |
-9% | 16% | 8% | -24% | 17% |
| Source: FactSet | ||||||
You can click on the tickers for more information about each company, including news, ratings, price ratios and financial data.
Knight-Swift
KNX -2.19%
the impressive growth figures result from the merger of Knight Transportation and Swift Transportation (with Knight technically the surviving company) in September 2017, as well as the acquisition of the amalgamated company to acquire Abilene Motor Express.
Fund assets
The Motley Fool Small and Medium-sized Growth Fund was established in 2010 and has assets of $ 318 million. Morningstar ranks the fund three out of five. Its average return over the last five years has been 11.1%, which is lower than the Russell 2500 growth index.
R25IG, -0.93%
which had an average return of 11.8% over the same period.
Barker said that although the fund could buy stocks of small- and mid-cap companies, it was increasingly focusing on a mid-cap strategy.
Here are the top 10 holdings of the fund as of September 30:
| Company | Teleprinter | Industry | Fund's share | Total return – 2018 to 4 October | Total yield – 3 years | Total return – 5 years | |
| XPO Logistics Inc. |
XPO, -1.80% |
cartage | 7.7% | 22% | 309% | 429% | |
| Align Technology Inc. |
ALGN, -1.34% |
Medical Specialties | 5.0% | 61% | 529% | 681% | |
| Paycom Software Inc. |
PAYC, -1.17% |
Software | 4.1% | 75% | 280% | N / A | |
| Cooper Companies Inc. |
COO, -0.35% |
Medical Specialties | 4.0% | 23% | 80% | 111% | |
| Texas Roadhouse Inc. |
TXRH, + 0.56% |
restaurants | 4.0% | 27% | 87% | 179% | |
| GrubHub Inc. |
WORM, -0.53% |
Internet software / services | 3.9% | 82% | 406% | N / A | |
| ResMed Inc. |
MSY + 0.02% |
Medical Specialties | 3.6% | 31% | 125% | 124% | |
| Paylocity Holding Corp. |
pctY, -1.81% |
Software | 3.3% | 55% | 146% | N / A | |
| Splunk Inc. |
SPLK, -1.15% |
Information Technology Services | 3.3% | 35% | 99% | 78% | |
| LCI Industries |
LCII, -1.32% |
Various Manufacturing | 3.2% | -36% | 61% | 98% | |
| Source: FactSet | |||||||
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