Top Five Mid-Cap Stocks: March 27
03/27/08 - 09:57 AM EDT
TheStreet.com Ratings Staff
C.H. Robinson (CHRW Quote - Cramer on CHRW - Stock Picks) is one of the world's largest third-party logistics companies. It provides freight transportation services and logistics solutions to companies of all sizes. Customers are spread across a variety of industries. The company has offices in North and South America, Europe and Asia.
C.H. Robinson is a non-asset-based transportation provider, meaning that it does not own the equipment used to transport customers' freight. Instead, the company has relationships with approximately 40,000 transportation companies and hires from among these the appropriate transportation. C.H. Robinson grew out of a sourcing business (the buying, selling and brokering of fresh produce) that began in 1905, and sourcing continues to be a portion of the company's business. The company even has its own brand of produce. Our buy rating for C.H. Robinson has not changed since November 2002. The rating is influenced by the company's healthy financial performance in the fourth quarter of 2007. We also believe that it is well positioned for the future, due to its growth initiatives and strong balance sheet. Revenue increased 19% year over year to $1.95 billion in the fourth quarter, supported by strong performances across segments. Net income rose 19% to $85.3 million, aided by a higher operating margin and a slight increase in investment and other income. C.H. Robinson continued to have zero debt on its books at the end of the fourth quarter, while shareholders' equity (net worth) stood at $1.04 billion. The company has also continued to expand its capabilities within the truckload market and develop several high-service offerings. Looking ahead to 2008, C.H. Robinson plans to open five to 10 new offices and make acquisitions that should enhance its service offerings. The company also plans to expand into two new geographical regions to achieve its long-term growth goal of 15% a year. Softening economic conditions and rising fuel prices are the principal risks to our rating for this stock. Additionally, any adverse changes in the regulatory framework are a cause for concern, as is potential foreign currency risk from international expansion. Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could impact the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company. Know What You Own: CHRW operates in the air delivery and freight services industry, and some of the other stocks in its field include UPS(UPS Quote - Cramer on UPS - Stock Picks) and FedEx(FDX Quote - Cramer on FDX - Stock Picks). These stocks were recently trading at ($72.78, +0.07%) and ($91.64, +0.43%) respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.
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