EXPEDITORS INTERNATIONAL OF WASHINGTON (EXPD) – This is one of the few forward growth stock plays that we’re issuing, largely because of the unique parameters of EXPD’s high cash flow, low debt business model.
Expeditors International of Washington is a non-asset-based freight-forwarding and third-party logistics, or 3PL, provider. It is the best and nearly the biggest in its business. It has been profitable, and is a long-run-focused firm sitting on a mountain of cash. It owes no debt, and produces strong cash flows of 17+% while deploying nearly no assets. Expeditors’ has had a record of steady growth, high margins, and high returns on invested capital.
We see it as a long term holding. With prices affected by sluggish demand for shipping, it is still trading near the bottom of its range. Morningstar gives it a fair market value of $61.00, so current price is about a 38% discount to FMV. The 1.7% dividend is nothing to write home about comparatively to our other holdings, but it does keep inflation out of the picture and allows time for a growth upswing in transportation which should start within a few months after the November elections here, and some improvements in Asia’s economy that are trending toward increased shipping.
It’s trading flat to down slightly (4% from our original position), but we’re adding shares as opportunities around $38.00 or less present themselves. BUY/ACQUIRE.