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Billionaire investors are always looking for the next great opportunity. Yet lately, they’ve been moving away from expensive U.S. tech stocks and into something a little more under the radar. One stock that’s been catching their attention in bulk is Cargojet (TSX:CJT). While it may not have the flashiness of artificial intelligence (AI) or the speculative hype of the latest tech trend, Cargojet stock is proving to be a powerhouse in the logistics space, and deep-pocketed investors are taking notice.
Why Cargojet?
The company’s recent earnings report revealed just how strong its business has been performing. In the third quarter of 2024, Cargojet saw its revenue jump 15% year over year to reach $245.6 million. More impressively, adjusted earnings per share (EPS) soared to $1.48, compared to just $0.15 a year prior. That kind of earnings surge is the sort of thing long-term investors dream of, especially in a market where many former high-flyers are struggling to maintain their momentum.
One of the biggest drivers of Cargojet’s success is the ongoing demand for fast, reliable logistics services. The e-commerce boom is still in full force, and as more consumers expect same-day and overnight deliveries, companies need dependable partners to get products to customers. Cargojet dominates Canada’s overnight air freight market, handling over 90% of the volume. That kind of market share isn’t easy to come by and makes it an attractive investment for those looking for a business with a strong competitive moat.
Looking ahead, the TSX stock’s growth prospects remain promising. Analysts expect earnings to increase by 28.5% annually, while revenue is projected to rise by 4.9% each year. This steady and predictable expansion is exactly what billionaire investors look for when rotating out of speculative assets and into more stable growth opportunities. Cargojet’s current valuation also makes it more appealing compared to overheated U.S. tech stocks. With a forward price-to-earnings ratio of 18.21, it’s trading at a much more reasonable level than many tech firms with lofty valuations and slowing revenue growth.
Considerations
Leadership is another crucial factor in Cargojet’s success. Founder and Executive Chairman Dr. Ajay K. Virmani has played a significant role in building the TSX stock into what it is today. His strategic vision has earned him widespread recognition, including a recent appointment to the Order of Canada. When a TSX stock has a strong leader at the helm, it provides reassurance to investors that it’s being steered in the right direction.
There are, of course, risks to consider. Cargojet operates in a capital-intensive industry, which means factors like fuel prices and economic downturns can impact profitability. The TSX stock’s debt levels are also worth watching, as it currently holds $703 million in total debt with a debt-to-equity ratio of 98.69%. However, its strong cash flow of $257.4 million over the past twelve months suggests it has the ability to manage its financial obligations while still reinvesting in growth.
Despite these risks, billionaire investors see Cargojet as an undervalued gem in a market full of overhyped names. The TSX stock’s business model is essential, demand for its services is only increasing. And it has a track record of solid execution. As more investors look to diversify away from high-volatility stocks, Cargojet presents an opportunity to own a company with both stability and growth potential.
Bottom line
Right now, the TSX stock is trading at around $112, down from its 52-week high of $145. This means there’s still plenty of upside for those who believe in the company’s long-term trajectory. With nearly 49% of shares held by institutions and a growing number of high-net-worth investors buying in, Cargojet appears to be in a strong position moving forward.
As billionaire investors shift away from U.S. tech, they’re placing their bets on companies with real earnings, dominant market positions, and clear growth strategies. Cargojet checks all those boxes, making it one of the most interesting TSX stocks to watch right now. If it’s good enough for billionaires, it might just be worth a second look for the rest of us.
