Air T Inc
Air T Inc is a small-cap North Carolina company that specializes in providing support on a contract basis to the air express delivery services industry. The $23 million firm also provides ground support to the United States Air Force, airports, and industrial customers. Currently trading just over $9 per share, Air T has a 52-week range of $5.78 to $9.97, and the company pays a dividend of $0.25 for a yield of 2.7%. Air T reported a 15% growth in quarterly revenue, and the company is debt-free with more than $1 million in free cash flow.
After making a bullish climb over its 200-day moving average December, the company repeated the feat in January. Now trading nearly 10% above the moving average, the stock has an appealing combination of both growth and dividend. Additional growth is not unlikely, as the company's price to book ratio of 0.83 and its forward price to earnings ratio of 10 both suggest it is undervalued. Taking a position in Air T now could have big benefits as business opportunities expand.
CH Robinson Worldwide Inc.
Headquartered in Eden Prairie, MN, CH Robinson Worldwide is third-party logistics company that provides support to approximately 49,000 transportation companies. CH Robinson relies on trucking for almost 80% of its revenue, and in spite of high fuel costs, it still managed to make a double-digit increase in revenue for the fifth consecutive year. Currently trading near the bottom of its 52-week range ($62.30 - $82.61), I think that now is a great time to buy.
Although its price to book ratio is an uncomfortable 8.6, its forward price to earnings ration is only somewhat high at 19. The company deals with low volatility (with a beta of 0.76), and the fact that it is debt-free means CH Robinson doesn't have to deal with many of the pressures felt by leveraged companies. Recording 6% quarterly earnings growth on a revenue increase of 10.4%, the company is gaining ground and protecting the nearly $400 million it his in free cash flow. This company gives every indication of being ready to move, and I am rating it a buy.
Along with United Parcel Service, FedEx is probably the leading name in the air delivery & freight services sector. This $29 billion company has helped to make overnight delivery a necessity instead of a luxury; it has also become a great investment for many people. Trading near $93 per share, the stock has a 52-week range of $64.07 - $98.66, and price to earnings ratio of 16 and a one-year target estimate of just over $105. In addition, FedEx announced on February 17, 2012 that it would increase its quarterly dividend from $0.51 to $0.52 for a yield of 0.50%.
While FedEx does not pay a large dividend, it can generate some nice growth for shareholders. The stock climbed 3.5% against the S&P500 over the past year as it increased quarterly revenue by 10% and earnings by an impressive 75.6%.The company has a low debt to equity ratio of just 10.55, and its payout ratio is a mere 7%. Already trading about 15% above its 200-day moving average, the company is showing that it has growth potential; the 13% growth target indicates that now may be the perfect time to take a position in the company.
Forward Air Corporation
Much like CH Robinson Worldwide, Forward Air Corporation specializes in point-to-point shipping to a growing number of cities and airports in the United States and Canada. Headquartered in Greeneville, Tenn., the $1 billion company pays a $0.28 dividend for a 0.8% yield. Its shares trade for around $34 per share with a 52-week range of $23.70 - $37.00, with a one-year estimate of $40. Its current price is nearly 10% above its 200-day moving average of $30.75.
Forward Air is one of many trucking companies that are fighting the new US Department of Transportation guidelines for driver fatigue. Concerns are that the rules could increase shipping costs while forcing drivers to spend more time on the road during rush hour periods, decreasing safety. The company is coming off a solid 2011, where it recorded quarterly revenue growth of 11.2% and earnings of 22.3%. Combining growth and dividends, Forward Air is delivering value to both its shipping customers and its investors.
United Parcel Service Inc.
Atlanta, GA-based United Parcel Service is the largest and best-known of the public air delivery & freight services. The $74 billion enterprise has been in existence for more than 100 years, and it offers service throughout the United States and the world. Trading for around $77 per share, the company has a 52-week range of $60.74 to $77.55, and the company recently announced a dividend increase to $2.28, which allowed it to break the important 3% mark. In addition to its dividend, UPS has a one-target estimate of $87. This 13% gain is another factor in declaring the stock to have a "must-own" standing.
United Parcel is not only growing through its 5.6% quarterly revenue gain; the company is also active in the acquisition market. The company recently made a bid for Dutch shipping company TNT Express NV, offering $6.4 billion for a piece that would help expand its reach in Europe. Although United Parcel Service has a cumbersome price to book ratio of 9.5, there is so much growth potential and dividend return that investors should look for a pullback in share price and consider taking or increasing a holding in this fine company.
Shipping Profits to Investors
While many business sectors struggle to have one or two solid investments, air delivery & freight services has a variety. I am personally drawn to FedEx Corporation and United Parcel Service Inc. for their market domination, or their economic moat, but Air T Inc, CH Robinson Worldwide Inc. and Forward Air Corporation all offer solid options for anyone looking to take a position in this sector.