When it comes to beating the market, many investors often think they need to stay on top of the hottest plays at a given point in time, trading pot stocks and being in the know on the latest in cryptocurrencies, when in reality, they should just be focusing on finding wonderful businesses with a means to sustainably grow earnings over the next five years, 10 years, or even 20 years. And if such a stock is found, it should be added to a watch list until it trades at a reasonable valuation given the company’s growth prospects.
When you spot a wonderful business, it’s quite rare that you’ve noticed it at a time when the price is depressed (unless you’re lucky), so it’s usually a good idea to add a stock to your radar, so you can watch it and wait for an opportune moment to pounce. With that in mind, here’s a buy-and-hold stock that you should consider adding to your radar, if not your portfolio, today.
What if I told you there was a way to obtain exposure to growth from the red-hot Canadian e-commerce industry, and, coincidentally, that same business has gradually built such a wide moat for itself over the years such that it essentially has a monopoly over its market of operation? You’d probably think that the average investor had already piled in to the stock; however, that’s not the case. The company has flown under the radar of the average Canadian investor, with the stock having below-average trading volumes for a given day.
Enter Cargojet Inc. (TSX:CJT), a wonderful small-cap business that controls over 90% of the Canadian overnight shipping market. Management has done an impeccable job of unlocking value through its operational efficiency, boosting initiatives to capitalize on a major opportunity that will span the next decade.
As more disruptive digital retailers come after Canadian online consumers (likely from the U.S.), more overnight packages will need to be delivered. And with a growing fleet of high-payload aircraft at its disposal, given the company’s continuously improving utilization, there’s an ample amount of earnings growth that will be realized in time. Given the high costs of starting your own aircraft fleet, the company is well positioned to continue to enjoy a majority of the pie, as the demand for Canadian overnight shipping increases.
The stock is up over ~31% since I first recommended it in November 2017, and it appears that there’s nothing that will stop the momentum in its tracks over the long term, as more Canadians transition from brick-and-mortar to direct-to-consumer digital retailers.
At 32.2 times forward earnings, the stock is definitely a high-flyer that’s anything but cheap, but given the growth runway, I think it’d be a wise decision to keep the stock on your watch list should a market-wide correction send shares tumbling.
Stay hungry. Stay Foolish.
