A Rare Triple Threat Stock That’s a Strong Buy Today

TFI International (TSX:TFII) stock is a must have for income, growth and value investors. It makes a great addition to your TFSA and RRSP.

| More on:
little girl in pilot costume playing and dreaming of flying over the sky

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

There are three general baskets of stocks: income, growth and value. Stocks belong to one, or more than one of these generally accepted types. It is rare however, for stocks to belong to all three. It is thus very satisfying when you come across a stock that fits all three stock types. It is considered a triple threat.

One stock that qualifies as a rare triple threat is TFI International (TSX:TFII). TFI is a transportation and logistics company with operations across North America. The company operates in four segments: Package and Courier, Less-Than-Truckload, Truckload, and Logistics and Last Mile.

TFI International has been one of the top performing industrials in Canada. Over the past five years, its stock price has average 17.8% annual growth. Year to date, it has rewarded investors with a 23.77% gain. Its performance far exceeds that of the broader TSX and the TSX Industrial Index.

A top income stock

As of writing, TFI International yield’s a decent 2.18 per cent. What it lacks in yield, it makes up for in dividend growth. The company is a Canadian Dividend Aristocrat with an eight-year dividend growth streak. Over that period, the company has averaged double-digit dividend growth. Its last raise, which came this past December, was 14.29% and above historical averages.

Another positive takeaway is there is plenty of room for the dividend to grow. TFI has a conservative payout ratio of 29.80% when compared to earnings and only 31% as compared to free cash flow. As such, investors can expect double-digit dividend growth over the short and medium term.

A top growth stock

To qualify as a growth stock, companies must be growing by double digits. As we’ve mentioned, TFI’s stock price has grown at an impressive pace. This is not surprising given that the company has grown earnings by 20% annually on average over the past five years.

Looking forward, shareholders can expect much of the same. Analysts estimate that the company will grow earnings by 19% on average over the next five years. In the first quarter of 2019, adjusted earnings per share grew by 40%; it’s well on its way to crushing 2019 estimates.

A top value stock

To close, TFI International is also trading at attractive valuations. Despite its 23% gain in 2019, the company is still cheap, and is trading at a steep discount to its historical price-to-earnings (P/E), price-to-cash flow (P/CF) and price-to-book (P/B) historical values.

Furthermore, at a P/E to growth (PEG) ratio of 0.59 the stock is also cheap based on future growth expectations. A PEG ratio under one is a sign that the company’s share price is not keeping up with expected growth rates. It is thus considered undervalued.

Analysts are in agreement with an average ‘buy’ rating and a one-year price target of $53.36 per share. This implies 22% upside from today’s price of $43.69 per share.

Foolish takeaway

TFI International is a must-have for your TFSA or RRSP portfolio. Management has an excellent track record and the company offers something for investors of all types. Don’t miss out on this triple threat opportunity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor mlitalien has no position in any of the stocks mentioned.

More on Dividend Stocks

Tech Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

These two TSX stocks aren’t as popular as other names, but they are smart buys right now because both are…

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

Not all stocks with high-dividend yields are great buys. Here are three stocks to consider for your portfolio today.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Dividend Lovers: 2 U.S. Stocks to Power Up Your Portfolio

Dividend investors in Canada can consider buying these two top U.S. stocks right now to diversify their portfolios and get…

Read more »

Growth from coins
Dividend Stocks

2 TSX Stocks to Buy With Dividends Yielding More Than 3%

Here are two TSX stocks to buy today with dividends yielding more than 3%!

Read more »

growing plant shoots on stacked coins
Dividend Stocks

TFSA Passive Income: Earn $317 Every Month Tax Free for Life

By leveraging A TFSA, Canadians can earn a tax-free passive income of $317 every month for life.

Read more »

edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Dividend Stocks

2 Cheap TSX Dividend Stocks to Buy Now for a TFSA or RRSP

TFSA and RRSP investors can now buy top TSX dividend stocks at cheap prices for portfolios focused on passive income…

Read more »

Man data analyze
Dividend Stocks

Have $1,000? 2 All-Weather Dividend Stocks to Buy and Hold Forever

Canadians with $1,000 to invest can buy two all-weather dividend stocks today and hold them forever.

Read more »

office buildings
Dividend Stocks

2 Stocks to Invest in U.S. Real Estate

Do you need more income? Consider diversifying your real estate portfolio to the south via value U.S. REITs.

Read more »