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Published:
December 26, 2007
The
correct answer is 
(E.) Expeditors International
of Washington (EXPD)
EXPD is a leader in the
non-asset-based freight business.
That means that it arranges to have
goods transported but doesn't
actually own the planes, railroads,
trucks, or ships that actually move
those products. Essentially, it acts
as a middleman, reserving cargo
space on someone else's fleet and
then filling that space with its
customers' merchandise.
EXPD deals in huge volumes and can
arrange sharply discounted shipping
rates, and those savings are then
passed on to clients. By dealing
with experienced logistics experts,
EXPD's customers also avoid common
headaches that arise from overseas
shipping -- letting someone else worry
about hassles like clearing customs
and handling tariffs.
Over the last three years, EXPD's
earnings have nearly doubled from
$122 million to $235 million per
year, and analysts are expecting
profits to continue rising at a
rapid +19% pace for the foreseeable
future. This is driven in part by
surging demand for raw materials in
Asia, which has created a boom in
international trade -- and that in
turn has led to astonishing gains
for shipping firms and expeditors.
But the great thing about expeditors
is that, unlike shipping firms, they
don't have to make costly capital
expenditures to buy and maintain
fleets.
The firm's name might not be the
catchiest, but EXPD's business model
sure stands out -- its returns on
invested capital (ROIC) stand at a
stellar +23%, nearly double the S&P
500 average of +12%. But is the stock
a bargain, or have so many investors
jumped on board that it's
overpriced? Editor Nathan Slaughter
knows the answer, and in a recent
issue of StreetAuthority's value
investing newsletter,
Half-Priced Stocks,
he evaluated whether EXPD
could be a possible addition to one
of his model portfolios. But if you
want to read Nathan's analysis of
the company, including its
Price Appreciation Potential,
then you must be a subscriber. To
lean more about Nathan's
Half-Priced Stocks
newsletter, please
visit this link.
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