Friday, June 30, 2017

When A Stock Doesn't Have Much Daily Average Volume?

         What is the one thing that would cause a massive panic in people lives.  One thing we all take for granted.  When we drive or walk down a road we often do not think about it as it is all we know and we do not know any different.  I am talking about the trucking industry.  The saying "If you got it, a truck brought it" is so true.  The stones to make a retaining wall, the steel gates for businesses, cars, and gasoline at the gas station. A truck has to be utilized to bring all these to their current location in one form or another.
         Titanium Transportation Group Inc is a relatively new trucking company.
Titanium Transportation Group Inc is a Canada-based transportation and logistics company, which offers its services in North America. It operates in various segments, including Truck Transportation, Logistics and Corporate. It provides freight transportation services to customers, including large multinational corporations across various industries, with truckload and cross-border trucking services, freight logistics, and warehousing and distribution services. It offers trucking services through a range of trailer types, including flatbeds, step-decks, heavy axle trailers and other specialty equipment, totaling approximately 400 power units and 1,000 trailers. It also provides a range of ancillary transportation services, such as third-party logistics and freight forwarding. It also offers warehousing and distribution services, including order management and fulfillment, shipment consolidation or de-consolidation, cross dock, and reverse logistics (refurbished and restock processes). Source: Google Finance
    Titanium Transportation Group Inc. was founded in 2002 as logistics broker.  Their first truck was purchased in 2005.  In 2007, Zzen Group made a private equity investment.   The company has made 7 acquisitions from April 2011 to March 2015. The company remained private up until April 2015 and then became a public company.  The are listed on the Canadian Venture Exchange under the ticker symbol TTR.  The company is headquartered in Bolton, Ontario.

     Currently the stock trades at $1.13 a share and has a market cap of $42.63 million.  According to a June presentation, Zzen Group owns 39.2% of the company, which corresponds to 14,657,482 shares.  Titanium had 37,388, 510 shares outstanding as of June. The next highest shareholder is the founder and CEO, Tim Daniels, who owns 9.8% of the company with 3,667,647 shares.

     TTR does not have very low trading activity with an average daily trading volume of approximately 3500 shares. The company has made some acquisitions after they went public.

     Over a span of 5 years there revenue has grown each year in 2 of the 3 segments.  The revenue consists of 3 segments which are corporate, logistics, and trucking.  The corporate segment has grown to  $116.6 million in 2016 from $32.7 million, which represents a compound annual growth rate of 37.42% over 5 years.  The logistics segment has grown to $33.9 million in 2016 from $15.8 million in 2012, which represents a CAGR of 21.03% over the last 5 years.  The trucking segment has grown to $84.0 million in 2016 from $17.2 million in 2012, which represents a CAGR of 48.66% over the last 5 years.

    TTR has grown revenues a lot over the last 5 years. As they are relatively a new company, they will be growing the company and likely not pay a dividend.  Could the company continue to grow?  The company has currently has over 400 tractors and over 1300 trailers.  The company does not do intermodal as of this time, from what I get from there website. I believe the company will get involved in intermodal by opening terminals in major markets in Canada or develop partnerships with major carries in different geographical locations. Canada has access to a lot of freight from all over the world via their ports located in Vancouver, Prince Rupert, Montreal and Halifax. Canada also has 2 class one railways in Canadian National Railway and Canadian Pacific Railway. 


  Trucks play an important vital role in our lives as everything moves by truck at one point or another. Trucking is a very cost intensive business, which affect the margins.

 I do believe this company will do well in the future, but will face some immediate future due to the high possibility of a recession. North America has not had a major recession since the 2008-2009.  A recession, on average, happens every 8-10 years. 

   Today, I ended up purchasing 1000 shares at $1.24 inside my margin account. I had limit orders in over several days but the price never went down to my limit price. Last night, I apparently mis-typed my limit price of $1.08 by typing $3.08.  Always double check or even triple check your orders when it comes to the markets.  The order got filled at $1.24 this morning at the market opening.  I guess I should be thankful as my purchase price got of been higher.  I will hold on to my shares for now as I do not expect the stock price to fall that much in value.  With the stock thinly traded, I do not expect much movement in the stock over the next few months unless a major announcement happens of some sort. This is a stock that an investor or trader has to be patient with and just go about other business.

   The company could be acquired by one of the major players in the industry.  I own shares currently in TFI International which is involved in Transportation and Logistics and Canadian National Railway.

Disclosure:  Long TFII, TTR, CNR

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

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