We recommended the following stocks for Q3 – Portfolio - CHRW, CPA, CSX, DAL, EXPD, FWRD, UNP
Q4 – Portfolio – CHRW, CPA, FDX, FWRD, KSU, NSC, UNP
C.H. Robinson Worldwide Inc. (Nasdaq:CHRW)
As predicted in the Q3 update, the stock tested $75 in Q4 (Oct 24,2011). However, since then it has been a downhill story. Yesterday, the stock gained $2.24, or 3.52 percent, to close at $65.87. It needs to be seen if the rally seen in yesterday's trading is a brief one, or if it marks a north journey.
Yesterday's trading range of $65.25 to $66.54 compares with a 52-week trading range of $62.30 to $82.61. Currently, analysts' one year target price is $76.50.
The company's third quarter results were in line with analysts' consensus estimates. One of the seasonal successes and a category the company did well in during the third quarter was the melon business. The size and revenue of the company are not really material, but the melon category represents something strategic for the company. During the third quarter of 2011, CHRW purchased 1,408,314 shares at an average price of $68.88.
The company's earnings growth (2011/12) is relatively lower at 13.79 percent compared with its industry's growth rate of 20.7 percent. Currently, the stock is trading at a P/E of 25.59, which means the stock is trading at a premium. In the last five years, the company's earnings consistently increased from $1.53 to $2.33. LTW earnings is higher at $2.58 and given its earnings persistence, I think the premium is justified.
Based on a log-normal random walk, within the next month there is a 95 percent chance the stock price could be between $58.20 and $76.57. Buying at current levels could amount to a profit-loss ratio of 1.4 to 1.
Copa Holdings S.A. (NYSE:CPA)
A few days back, the stock came close to testing $75 (Nov 3,2011 - $71.76). I reiterate that the stock will test $75 by the end of Q4. Yesterday, the stock gained $3.30 or 5.64 percent to close at $61.80. It remains to be seen if the rally in yesterday's trading is a brief one, or if it marks a north journey.
Yesterday's trading range of $59.80 to $61.81, compares with a 52-week trading range of $49.54 to $72.86. Currently, analysts' one year target price is $80.
The company's third quarter results were better than analysts' consensus estimates. Copa's earnings growth (2011/12) is significantly higher at 41.19 percent compared with its industry's rate of -3.7 percent. Currently, the stock is trading at a P/E of 8.85, which means the stock is trading at a discount.