# Cargojet (CJT.TO)



## james4beach (Nov 15, 2012)

This is a cargo airline based in Mississauga, formerly Canada 3000 Cargo. Does anyone hold this?

Performance has been amazing, 10 year CAGR of 38% and 5 year CAGR 33%. It's reasonably large, with market valuation slightly over $1 billion. _Very_ thinly traded and low volume, though.

I kind of like the thinly traded Canadian growth stocks. Because of their low volume, they are not accessible to US hedge funds. I think there are more opportunities for us small investors with these stocks that are not touched by US speculators.

It's on my shortlist and I'm considering adding it to my low dividend portfolio


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## Ag Driver (Dec 13, 2012)

Deleted.


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## doctrine (Sep 30, 2011)

I believe you missed the boat on this one about 4-5 years ago. All of that magic growth is built in. It doesn't really have a competitive advantage beyond its market leading position. If Amazon decided to bring its own planes up here, the stock would be hit for sure.


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## Ponderling (Mar 1, 2013)

i was considering this recently, but the p/e scared me away.


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## james4beach (Nov 15, 2012)

I bought CJT a few months ago, and currently it's the best performing position in my growth portfolio. To clarify, that's my high risk portfolio, relatively small versus the rest of my equities. So these are small positions.

CJT is back near its all time highs again and has outperformed the TSX throughout the crisis; it's critical in supply chains

Cargojet CEO appeals for government support as freight demand surges - BNN Bloomberg



> The chief executive of Canada’s largest air cargo carrier is appealing to the federal government for financial support, regulatory breaks and protective supplies as the company faces surging demand for its services.
> . . .
> Mississauga, Ont.-based Cargojet has a near-monopoly on Canada’s air cargo market, representing more than 90 per cent of the country’s overnight air cargo lift, according to a recent report by AltaCorp Capital analyst Chris Murray.
> 
> And as demand for household goods, health care supplies and online deliveries grows, so too does demand for Cargojet’s services.


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## doctrine (Sep 30, 2011)

They are doing well, but you would think with all of the surplus planes out there doing nothing and likely for a while, someone might take a run at their business.


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## andrewf (Mar 1, 2010)

Speculation that Amazon may acquire them, as they are becoming quite important to their business in Canada.


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## Ag Driver (Dec 13, 2012)

Deleted.


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## doctrine (Sep 30, 2011)

CJT unlikely to be acquired by anyone at a price to book ratio of 7 and a P/E of 140, even before a premium takeover offer. There are too many planes doing nothing, a company could build equivalent capacity for a fraction of the price. Maybe that will never happen, but remember this company is basically 22 planes with cargo shelves instead of passenger seats, likely with an Amazon takeover premium already built in.


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## james4beach (Nov 15, 2012)

Those are reasonable arguments, but CJT just hit a new all time high today.

The stock chart seems to have a high correlation with AMZN over the last few months:








CJT.TO - Cargojet Inc.


SharpChart from StockCharts.com




stockcharts.com


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## doctrine (Sep 30, 2011)

Well, I wouldn't short it. But there is plenty of irrational behavior on the markets, both up and down. This looks like pure momentum to me and nothing to do with fundamentals at all. The trading volume has accelerated along with the price, meaning orders of magnitude more of cash is flowing in and out of this stock. I just don't see how that valuation gets filled in the long term. 9 times out of 10, this ends poorly in a game of hot potato and bag holding.


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## m3s (Apr 3, 2010)

Air Canada Jazz is converting passenger aircraft to cargo by removing seats


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## james4beach (Nov 15, 2012)

New all time highs on CJT, quite an amazing run. I initially bought it at $105 at the end of last year, and it's now nearly $165. It's currently my best performing growth/momentum position.


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## Eder (Feb 16, 2011)

I had these guys years ago ~$20 but sold ~$80 quite awhile ago...I guess I should have stayed in....good one!


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## MrBlackhill (Jun 10, 2020)

Good morning! (+15% this morning)


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## james4beach (Nov 15, 2012)

Wow, that's quite a move. This is still my best performing growth position by far. Up 80% since my purchase.

When screening for high risk stocks, I *do* look for momentum.


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## doctrine (Sep 30, 2011)

So they grew revenues but managed to lose $50M because the fair value of the warrants given to Amazon rose over $80M in the quarter. The growth is impressive but at this point, basically, all of the profits and more of the business are flowing to Amazon via the increasing value of their warrants at the expense of current shareholders. Not a problem of course as the share price goes up. Now trading at 13 times book value.


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## MrBlackhill (Jun 10, 2020)

CJT currently loosing that +15% it had. I don't know what caused that jump, but I guess some are taking the opportunity to take profits or didn't agree to that jump, haha.


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## james4beach (Nov 15, 2012)

There was some very high volume selling on CJT on Tuesday. I suspect what's really going on, though, is that CJT trades according to AMZN. The correlation has been very strong in recent months:


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## james4beach (Nov 15, 2012)

Holding up surprisingly well during the current market selloff


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## MrBlackhill (Jun 10, 2020)

CJT is on a bull run again. I guess it's ER expectations.

Out my ~20 buys this year, CJT is my 3rd most profitable buy so far, after WELL and DOO.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> CJT is on a bull run again. I guess it's ER expectations.
> 
> Out my ~20 buys this year, CJT is my 3rd most profitable buy so far, after WELL and DOO.


Yeah, it's nuts. I'm up 70% since purchasing it and it has become the largest position in my growth portfolio.


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## james4beach (Nov 15, 2012)

They reported earnings today and the stock is up 7%

Since the start of this thread, CJT is now up 187% compared to just 2% for the TSX Composite


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## MrBlackhill (Jun 10, 2020)

Yes, what a day! So many of my stocks jumped today, my portfolio is up +3.66% today!


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## james4beach (Nov 15, 2012)

james4beach said:


> They reported earnings today and the stock is up 7%


And now on the positive COVID news, it's down to lower than its pre-earnings price.

The stock market sure is a funny place! You never know what's gonna happen with these dang crazy things.


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## james4beach (Nov 15, 2012)

I'm pasting a short news item on Cargojet video. The planes are full, cargo business is doing great and they're even hiring more people. Air Canada is entering the space too with planes re-purposed for cargo only.

I was very lucky with this stock pick. My stock screening procedure identified it at the end of 2019, so I was able to enter before COVID. If you look at the stock chart you'll see that it was already performing amazingly well in 2018 and 2019 but then it rocketed even higher in 2020. Probably a case of a business that was already doing well, which then through random circumstances (COVID) got a lucky break.

My position has more than doubled now. I'm sticking with it and will review again this summer.


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## MrBlackhill (Jun 10, 2020)

I've just noticed that CJT has a very high short interest ratio. I wonder why.


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## doctrine (Sep 30, 2011)

MrBlackhill said:


> I've just noticed that CJT has a very high short interest ratio. I wonder why.


Really? Price to book ratio of 17, $3.3 billion market cap, and a P/E ratio of 100 for a business that consists of 22 planes delivering parcels? CJT could trade at $50 a share and still be expensive.


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## MrBlackhill (Jun 10, 2020)

doctrine said:


> Really? Price to book ratio of 17, $3.3 billion market cap, and a P/E ratio of 100 for a business that consists of 22 planes delivering parcels? CJT could trade at $50 a share and still be expensive.


Numbers are back to normal. May have been a glitch on Yahoo Finance.

I think they are well positioned.


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