I liked the direction of Air Transport Services Group (NASDAQ:ATSG) back in April, as the company had taken steps to reduce some of the contract risks with its huge DHL business, was building business with the likes of Cargojet (OTC:CGJTF) and West Atlantic,
and was about to begin repurchasing shares. What I didn't like so much
was the valuation, and with the shares basically flat since then (up 2%
against a 1% decline in the S&P 500), I don't feel like I've missed
out on all that much.
There are some legitimate areas of concern
in the global airfreight market. Airfreight volumes are up for the year,
but have been outpaced by capacity growth and it's hard to find much
optimism regarding the health of the U.S. or Chinese economies. That
said, Air Transport's regional focus is an important differentiator, as
it gives the company exposure to e-commerce growth, and the company's
efforts to diversify its business seem to be on a good track. I wish my
fair values weren't so closely aligned with the sell-side consensus, but
I do think fair value for these shares lies between $11 and $12 today
and supports an interesting value opportunity.
Read more here:
Air Transport Services Group Ready To Take Off
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