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Opinions Stephen Groff
Cargojet IncCJT.TOCOMMENTSep 06, 2017
Stephen GroffStock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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It has good forward guidance with 25% earnings growth predicted. It is technically a little overbought so it may pull back $10 to $15.
David Burrows
There is little or no risk with solid long-term contracts with large companies like Amazon. It is managing costs well but volumes are weaker. It has good management along with good margins. It trades at 7X EBITDA which is the best price in a long time. He sold it as a tax loss but plans to buy back later in the year.
Out of favour right now, lumped in with slowing e-commerce. Monopoly for overnight air cargo delivery. Long-term contracts, and they get paid even if volumes are low. Very good EBITDA margins. At some point it will stabilize, better days ahead. Good time to start buying.
Terrific company. Will be around for the long haul, and will find a profitable niche. Hard to know how competitive the space will get. When passenger flights aren't full, they pick up cargo capacity, which steals CJT's lunch. He's waiting for an entry point to re-enter.
Cargojet did well over the pandemic and generally is doing better than the industry. It is now at 20 X earnings down from 30 X before. However it is facing some headwinds since the passenger airlines are recovering and they carry a lot of cargo as well as passengers,.
Short vs. long really matters to a company like this. Economic and e-commerce slowdowns really affect it. Not filling planes, so revenue is hurt. Excellent time to add a high quality company. Monopoly in Canada. Adding new routes. Planes are expensive. Short-term bumpy, long term you'll be just fine.
(A Top Pick May 10/22, Down 29%)
It has pulled back along with its international expansion plans. Cargo capacity has increased worldwide so there is too much supply. However it has a near monopoly on overnight cargo in Canada. He may add more.
Robert Lauzon
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%.