XPO Logistics, Inc (XPO)

Despite the non-stop boom in e-commerce, they lost their mojo in recent years. So last December, XPO spun off their faster-growing logistics business. It was a smart move, and the stock rallied 56% since then. The spin-off will be called GXO Logistics. After today's close, XPO reported a strong top and bottom line beat.

It's in a good spot if you don't own it. It's showing new strength, returning to past levels of strength. If you're new to this, buy.

It has exceeded by about 30% its fair market value. It has pushed beyond its intrinsic value. It could go higher to $118-$120 but he does not think it will grow any further than that. Since 2016 the trajectory of earnings has been slow and steady.

Transports are outperforming the market--a good sign. XPO does logistics, fullfilment, getting products from the plant to the customer. This is a tech company with 1,700 coders creating tech solutions. Organic revenue growth with smart acquisitins. Sufferered only a little pullback in the recent correction. Use a $95 stop loss. A strong performer in the transport space. (Analysts' price target $107.56)

The last time this peaked, it was at the equivalent P/B of about $71, and that would remain as his upside potential. It has overrun its FMV of about $55. It is getting on the expensive end of the spectrum.

Trucking. He likes it. They have a fantastic growth rate. Trucking has had some core fundamental positives. There is nothing wrong with this.

(A Top Pick Aug 17/16. Up 21.05%.) A global freight logistics company. One of those businesses in 2015 that got hit really hard because it had done too many acquisitions with a little bit too much debt into early 2016. Likes that it is a very high, free cash flow business. Trading at about 8.5X EBITDA, and growing in the 20%-25% rate. A fantastic business.

It ran into trouble when the roll up stories got into trouble in 2015. They ended up with too much debt. They ended up with fantastic businesses. He got into it early this year. He thought they would stop doing that and let the entity do well without further acquisitions and they did. Its earnings and outlook have improved a lot over the last couple of quarters. He really likes it.

(Top Pick Aug 22/16, Down 9.68%) It was just in the news because it sold its truck load business to TransForce here in Canada. They are a logistics company. They also own an LTL division. People thought XPO’s sale was at a low valuation, but he disagrees.