Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst Ann Heffron, who discusses C.H. Robinson Worldwide, Inc. (Nasdaq: CHRW) and Expeditors International of Washington, Inc. (Nasdaq: EXPD).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
For investors considering more safe-havens in their portfolios in the near future, would transportation stocks be a good place to overweight? Why or why not?
For retail investors, I think a particularly attractive industry within the transportation sector that has done well in the past and will continue to do so over the long term is transportation services. This includes companies such as C.H. Robinson Worldwide, Inc. (Nasdaq: CHRW) and Seattle-based Expeditors International of Washington, Inc. (Nasdaq: EXPD), both nonasset-based third party logistics providers. This means that these companies do not own transportation assets, but purchase transportation services from direct (asset-based) carriers and resell those services to customers.
There are two reasons why I like these companies. First, their earnings and revenue streams are relatively noncyclical compared to other industries within the transportation sector, such as airlines, trucking and shipping. This is not to say the services companies are not affected by changes in the economy. Rather, third nonasset-based model protects them from the extreme changes in revenues and earnings experienced by other companies within the transportation sector.
Second, given this characteristic, the transportation services industry has tended to outperform other industries within the transportation sector as well as the S&P 500. For example, the transportation services median stock price change for 2007 year-to-date has been 20.6% compared to an 8.5% gain for the S&P 500, a 19.8% rise for the rail industry, and a 4.8% decrease for the trucking industry.
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