As a stock investor, who doesn’t want to grow their 100 grand into a million? However, it doesn’t happen overnight. Nor can it happen with every growth stock. But investors who put $100,000 in Cargojet (TSX:CJT) in 2010 are lucky individuals who have lived the dream of becoming millionaires through stock investment.
Cargojet is a scheduled cargo airline that operates across Canada as well as to international destinations. The company has experienced staggering growth over the last 10 years. Anyone who had invested $100,000 in the company in 2010 would have grown their money well north of one-and-a-quarter-million dollars.
Can Cargojet stock undergo the same exponential growth in the next 10 years? Truth be told, it doesn’t happen every day that a stock delivers over 1,000% stock growth in 10 years. Nonetheless, Cargojet is still a good buy as a growth stock in your investment portfolio.
There are various reasons why this stock has become a godsend for its investors and could keep performing strongly in the future.
A cargo heavyweight with no competition
When it comes to air cargo in Canada, Cargojet is an undisputed leader. From its inception, the company has posed itself as a cargo entity that can take care of overnight shipping almost across the length and breadth of Canada. Overnight shipping is a tricky sector, and any new airline will think twice before challenging the reigning Cargojet.
With over 1,200 employees and operations at 16 airports from the coastal line of Atlantic to North Pacific, Cargojet has left no stone unturned to offer unparalleled overnight shipping service. This strong monopoly and unchallenged market territory indicate that Cargojet stock could continue to grow in the future.
Expanding e-commerce landscape will boost Cargojet stock
Nearly 90% of Canada’s population is concentrated in 10 urban centres. As e-commerce has taken centre stage in the retail shopping scene, the intra-country air transport industry should continue to thrive. Truck transportation in Canada is not as prevalent as the U.S.
This will make air shipping all more critical in the coming years. The booming online retail scene will prove to be an excellent long-term tailwind to Cargojet stock.
Downtime is not likely to happen
While airlines across the world frequently face employee strikes and ensuing downtime, Cargojet has been in a five-year contract with its pilots that will end in 2023. The agreement also includes a no-strike clause, which means there are fewer chances of Cargojet facing any downtime.
The earnings estimates of the next couple of fiscal years are also encouraging. As per those estimates, the earning per share could increase by 13.7% this year in comparison to 2019. And in 2021, this could ramp up by 52.4% year to year.
Cargojet might not experience the exponential growth of the past, but it could continue to grow, nonetheless. The absence of competitors and increasing need for overnight shipping provide a substantial tailwind to Cargojet stock.
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 Jason Hoang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC.