UTi Worldwide, Inc. (UTIW)

I like this company partially due to a number of its "negatives." The company has historically grown through acquisitions which most assuredly has led to a number of inefficiencies. Despite this the company has historically earned spectacular returns on invested capital and has had impressive free cash flow. The company most similar to it is Expiditors Intnl, which has had consistantly higher margins. Although this is partially be due to UTi's contract logistics segment I believe there is room for significant margin expansion. Add this on top of further growth and acquisitions and there is a large potential to increase earnings. The company's growth in the near term will be miniscule as the company has stopped acquisitions to help integrate previously acquired companies but long term growth should be easily above the S&P's. This is an emerging industry which has very favorable economics and I don't anticipate ever selling my shares(at least in the next 2-3 decades). There may be short-term risk caused by difficulties in integration but the current pricing represents a spectacular entry point.

3* Caps. Morn 5* pick "freight forwarding and logistics company. It facilitates the transport of goods--typically from Asia to end markets in Europe or the U.S.--within the supply chain from producer to seller. UTi deals with the regulations and permits needed to transport goods from one country to another. Thanks to its relationships with truckers, railroads, and shippers in multiple countries, the company can consolidate shipments for travel, allowing for bulk cost savings. As the global recession has reduced trade, the need for UTi's services has declined. Thus, anything to improve trading conditions should benefit the firm.
UTi issued $200 million of senior notes to finance acquisitions during 2007 but otherwise uses debt sparingly. We are not concerned, as the firm holds $225 million in cash and EBITDA covers interest costs almost 7 times.UTi's 32% annual growth rate during the last five years was aided by acquisitions. In fiscal 2007, acquisitions added 12% to net revenue and internal growth contributed another 15%. We project UTi to increase net revenue 20% in fiscal 2008, then taper down to just above 12% annual internal growth during the next five years.
UTi operates 603 offices and warehouses in 65 countries; in most regions, its global logistics network is largely established.The firm has a diverse list of customers; no client contributes more than 3% of net revenue. Return on invested capital is strong because of the small amount of assets needed to drive the business."
52 wk hH/L $7.91-&24.35, P/E 12.8, P/Book 1.6, P/Sales 0.3. Beta 1.42
Revenue/Employee (TTM) of 222,568.00 vs industry 200,076.00
Largest peer competitors UPS & Fedex