Ryder System, Inc. engages in the business of transportation and supply chain management solutions. Its three business segments consist of fleet management solutions (65% of total sales), dedicated transportation solutions (15% of total sales), and supply chain solutions (25% of total sales). Its current stock price as of April 2018 is $74.31 with a market cap of $3.762B
Buy at current stock price and hold until end of 2019, with a target price of $87.50 and a stop loss price of $62.52
Ryder’s significant customer base includes 50,000 companies that span across the automotive, food and beverage, healthcare, oil and gas, transportation, and many other industries. In the U.S., it has a 99.58% market share of commercial rental and a 13% market share of Fleet Management Solutions.
Its recent acquistion of MXD will give it access to the growing e-commerce sector, thus alleviating the losses typically suffered by the retail industry. Ryder’s network of 121 e-commerce hubs gives it access to 95% of US and Canada within a 2-day delivery timeframe.
Historically, Ryder’s earnings reports tended to negatively affect stock price. Our recommendation is to hold until immediately after the earning report, buying at an even greater discount with long-term growth through acquisition and COOP catalysts.
Aramark is an American food service, facilities, and uniform services provider to clients in fields including education, healthcare, business, corrections, and leisure. Its current stock price as of April 2018 is $38.32 with a market cap of $9.42B.
Long, with a price target of $47.10.
Aramark has a strong and growing client base because of client loyalty and continual referrals. It faces risks common to the industry, such as litigation, regulation, and growing labor costs. However, these risks are not higher compared to other comparable companies, and Aramark’s established reputation and well-known clients will contribute to its further growth.
Aramark’s recent acquisitions of Avendera and AmeriPride, as well as its technological strides with AI checkout machines and ordering, will help it streamline its process and increase sales growth. Moreover, the recent passage of tax reform legislation significantly benefits Aramark, and it will use the majority of its cash tax savings to accelerate deleveraging. All of these factors make Aramark currently undervalued.
Stitch Fix is a $2.05B online subscription and personal shopping service. Founded in 2011, its business model entails sending customers individually picked clothing and accessories for a one-time styling fee. Current stock price as of April 2018 is $21.17.
Buy at $21.17 and hold until 2022, with a target price of $30.00 and a stop loss price of $13.00
SFIX is a buy because while e-commerce is growing rapidly, most online apparel retailers lack the personalization that people value in shopping for clothes. Stitch Fix addresses this concern with its stylist-client connections and style algorithms.
The retail industry is experiencing a growing online penetration. The online retail industry is expected to grow from $70B in 2017 to $133B in 2022, with a 13.8% CAGR. Stitch Fix’s main competitors in the market are established retailers and online shopping giants, such as Macy’s, Nordstrom, and Amazon. However, no other company has the same combination of customization, machine learning, and professional stylists that Stitch Fix offers. Stitch Fix also has a superior business model to Le Tote, a comparable company that has forced subscriptions.
The company’s risks include competition from existing retailers and a slowing growth among its main customer base. Its areas of growth include more partnerships with luxury brands, new customer bases, and private labels to increase profit margins.