Mr. Brochmann: At William Blair, we attempt to cover more of the quality rather than dig in deep in individual sectors. I cover C.H. Robinson, Echo Global, Expeditors, Federal Express, Forward Air, Knight Transportation, Landstar, Pacer, UPS and UTi Worldwide.
TWST: Why did you choose these particular companies?
Mr. Brochmann: As you can tell, they are more in the non-asset or asset-light categories because that group tends to be a little less cyclical and has higher returns on invested capital, and can typically put up at least 15% earnings growth in any part of a normal economic cycle.
TWST: Who do you like in your coverage right now and why?
Mr. Brochmann: I recently upgraded FedEx and UPS to "outperform," and admittedly I was late to the party on that. I believe that a lot of investors suddenly became bigger believers in the recovery and were paying further out for earnings. Therefore, in momentum periods like this, if you look at past cycles, typically the companies with the greatest amount of operating leverage have rightfully gained the greatest share price appreciation. I believe that the world has moved to a heavy-asset, early-cycle mentality in the near term. However, I still believe Expeditors and C.H. Robinson remain best-in-class names. And Expeditors is particularly interesting right now because of the rapid growth in Asia.
Tickers included in this excerpt: CHRW, ECHO, EXPD, FDX, FWRD, KNX, LSTR, PACR, UPS, UTIW
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