Canadian Money Forum banner

1 - 20 of 22 Posts

·
Registered
Joined
·
17,964 Posts
Discussion Starter #1 (Edited)
This is a cargo airline based in Mississauga, formerly Canada 3000 Cargo. Does anyone hold this?

Performance has been amazing, 10 year CAGR of 38% and 5 year CAGR 33%. It's reasonably large, with market valuation slightly over $1 billion. Very thinly traded and low volume, though.

I kind of like the thinly traded Canadian growth stocks. Because of their low volume, they are not accessible to US hedge funds. I think there are more opportunities for us small investors with these stocks that are not touched by US speculators.

It's on my shortlist and I'm considering adding it to my low dividend portfolio
 

·
Registered
Joined
·
874 Posts
No thanks. Anything to do with airlines, I'm not interested in. I wouldn't touch it with a 10' barge pole. The running joke in my industry is "How do you make a million in the airline biz?" -- "You start with 10 million".

I said the same thing with Bombardier and I was comically joked at for "missing the boat". That boat has been huffing and puffing to keep afloat. No thanks.

If Purolator or Canada Post finds something cheaper down the road....and they will....CargoJet loses their shirt. Just like every Cargo airline before them. You might be ok until 2025, but it's a roll of the dice. Hell, they're picking up old beat up 747's now and grabbing them before they hit he graveyard. Archaic equipment is not cheap to run.

Don't touch airlines for investing.
 

·
Registered
Joined
·
2,817 Posts
I believe you missed the boat on this one about 4-5 years ago. All of that magic growth is built in. It doesn't really have a competitive advantage beyond its market leading position. If Amazon decided to bring its own planes up here, the stock would be hit for sure.
 

·
Registered
Joined
·
17,964 Posts
Discussion Starter #5
I bought CJT a few months ago, and currently it's the best performing position in my growth portfolio. To clarify, that's my high risk portfolio, relatively small versus the rest of my equities. So these are small positions.

CJT is back near its all time highs again and has outperformed the TSX throughout the crisis; it's critical in supply chains

Cargojet CEO appeals for government support as freight demand surges - BNN Bloomberg

The chief executive of Canada’s largest air cargo carrier is appealing to the federal government for financial support, regulatory breaks and protective supplies as the company faces surging demand for its services.
. . .
Mississauga, Ont.-based Cargojet has a near-monopoly on Canada’s air cargo market, representing more than 90 per cent of the country’s overnight air cargo lift, according to a recent report by AltaCorp Capital analyst Chris Murray.

And as demand for household goods, health care supplies and online deliveries grows, so too does demand for Cargojet’s services.
 

·
Registered
Joined
·
2,817 Posts
They are doing well, but you would think with all of the surplus planes out there doing nothing and likely for a while, someone might take a run at their business.
 

·
Registered
Joined
·
12,902 Posts
Speculation that Amazon may acquire them, as they are becoming quite important to their business in Canada.
 

·
Registered
Joined
·
874 Posts
I believe Amazon already picked up a 10% stake.

It is way to easy to lose cargo contracts. No thanks.
 

·
Registered
Joined
·
2,817 Posts
CJT unlikely to be acquired by anyone at a price to book ratio of 7 and a P/E of 140, even before a premium takeover offer. There are too many planes doing nothing, a company could build equivalent capacity for a fraction of the price. Maybe that will never happen, but remember this company is basically 22 planes with cargo shelves instead of passenger seats, likely with an Amazon takeover premium already built in.
 

·
Registered
Joined
·
17,964 Posts
Discussion Starter #10
Those are reasonable arguments, but CJT just hit a new all time high today.

The stock chart seems to have a high correlation with AMZN over the last few months:
 

·
Registered
Joined
·
2,817 Posts
Well, I wouldn't short it. But there is plenty of irrational behavior on the markets, both up and down. This looks like pure momentum to me and nothing to do with fundamentals at all. The trading volume has accelerated along with the price, meaning orders of magnitude more of cash is flowing in and out of this stock. I just don't see how that valuation gets filled in the long term. 9 times out of 10, this ends poorly in a game of hot potato and bag holding.
 

·
Registered
Joined
·
17,964 Posts
Discussion Starter #13
New all time highs on CJT, quite an amazing run. I initially bought it at $105 at the end of last year, and it's now nearly $165. It's currently my best performing growth/momentum position.
 

·
Registered
Joined
·
4,053 Posts
I had these guys years ago ~$20 but sold ~$80 quite awhile ago...I guess I should have stayed in....good one!
 

·
Registered
Joined
·
17,964 Posts
Discussion Starter #16
Wow, that's quite a move. This is still my best performing growth position by far. Up 80% since my purchase.

When screening for high risk stocks, I do look for momentum.
 

·
Registered
Joined
·
2,817 Posts
So they grew revenues but managed to lose $50M because the fair value of the warrants given to Amazon rose over $80M in the quarter. The growth is impressive but at this point, basically, all of the profits and more of the business are flowing to Amazon via the increasing value of their warrants at the expense of current shareholders. Not a problem of course as the share price goes up. Now trading at 13 times book value.
 

·
Registered
Joined
·
545 Posts
CJT currently loosing that +15% it had. I don't know what caused that jump, but I guess some are taking the opportunity to take profits or didn't agree to that jump, haha.
 

·
Registered
Joined
·
17,964 Posts
Discussion Starter #19
There was some very high volume selling on CJT on Tuesday. I suspect what's really going on, though, is that CJT trades according to AMZN. The correlation has been very strong in recent months:

20607
 
1 - 20 of 22 Posts
Top