Earnings estimates are rising, and analysts expect this fuel aggregator to grow by more than 60% next year.
World Fuel Services Corporation (INT)
From The Prudent Speculator
Born out of a merger between International Recovery Corp and Trans-Tec in 1995, World Fuel is an aggregator and reseller of fuels for its many customers in the aviation, marine and land transport markets around the globe.
As fuel tends to represent a significant portion of client operating expense, the firm can pass along significant savings by aggregating orders. Through nearly two-dozen acquisitions over the past two decades, INT has grown into a leader in a highly fragmented market. While the company was still able to produce a profitable Q2, shares are down 38% year-to-date as the pandemic has put a dent in volumes within the aviation segment (which typically represents close to 50% of revenue).
Aside from brokering fuel, we like that World Fuel Service also provides value-added technology and services, which include flight planning and logistical support, and the stock gives us “picks and shovels” exposure to travel without the risk of the transportation companies as the balance sheet is conservatively financed with just $450 million of net debt and no material maturities until 2024.
Shares trade for 10 times the current 2021 consensus earnings estimate, just two-thirds of the average multiple.
John Buckingham, The Prudent Speculator, theprudentspeculator.com, 877-817-4394, September 2020