Betting On TFI International

Just a short post today on a company I recently purchased.

I like to invest in companies and not buy the stock market. One company I have been watching for months has been TFI International (TFII). I bought 100 shares @$47.18 yesterday. It is basically a trucking company, but a big trucking company operating here in Canada the US and Mexico.

They help move things like waste, goods, building materials, auto parts, energy, lumber products. It also services the metals and mining sector, food and beverage, chemical and explosives sector and marine equipment.

They own 391 truck terminals, 7,058 power tractors and 24,617 trailers. That's a lot of trucks that require a lot of drivers that are in high demand and short supply. Competition is fierce and TFII will have to offer sweet pay and benefit packages to attract the best. This will cut into their bottom line but we're way off that happening anytime soon.

I own CNR and CP in the industrial space but I really wanted to add an essential company that the economy just can't live without. With the lack of pipeline capacity we are seeing crude by rail take up all the space on the tracks. Trucks will take up the slack caused by this effect. These goods have no other way to get to market other than by highway. This is my main case for buying this company. I view it as an vital service to get all of our goods to market. Let's look at some numbers;

Market Cap: $4B
Beta: 1.25

ROE: 25%

Forward P/E: 13.4

EPS Growth: 22%%

Revenue: $4.8B, per share =54.0

Debt: $1.6B
Forward Dividend: 1.76%
Payout Ratio 21.6%

Price Paid: $47.18

52 week high: $48.50

Why I Like It

High revenue stream, great return on equity, pays a dividend and has a low payout ratio. Earnings were down slightly but year over year they just keep spitting out a high level of free cash flow of $144M. Net cash is up an astounding 88% from the previous year. David Baskin and Ryan Modesto also

recently recommended the stock as a buy. The company also has a high level of insider ownership and is buying back shares with it's free cash flow.

Is it Risky?

With a beta a little over 1 it is a little more volatile than the broader market but we buy quality companies and TFII is a money making machine. I would rather buy this company than a mutual fund or ETF. You own a piece of a North American leader in the transportation and logistics industry.

Summary

The stock is trading near it's all time highs. It's still cheaper than the overall market at just 13 times forward earnings. It makes money and has a small manageable debt load. As a transportation company we deal with trucks on the road everyday and don't they piss us off all the time. What a great way to calm your road rage knowing that you own a piece of the industry so you can relax behind the wheel. 

That's the sound of money passing you on the road. I have tucked this away in my wife's retirement account and will look to add it to all accounts on weakness. You could also look at this as a hedge to all the driving and gas you are burning up daily that only costs you money. Owning TFII will allow you to grow some of that money for your future. I'm betting on it.

I ONLY BUY STOCKS FOR OUR RETIREMENT ACCOUNTS AND NEVER SELL THEM. NEVER GAMBLE WITH MONEY YOU HAVE SAVED FOR RETIREMENT

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews with top money mangers in Canada using a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

Would you buy TFII or do you own it?