The markets are in red for the second session this week but option traders are not bothered as our calls and puts continue to impress. We start trading today as we explore possibilities in the options of C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). C.H Robinson Worldwide with its market capitalization of $9.97B is a third party logistics company. The company provides freight transportation services and logistics solutions to companies of all sizes, in a range of industries.
Strong Second Quarter Results
I think it is expedient to start our analysis on C.H Robinson with an exploration of its financials as recently reported in the second quarter (Q2 2014). The company delivered earnings of $0.80 per share to beat the consensus analysts’ estimate of $0.77 by 3.9%. The reported earnings also marks a 14.3% gain over the $0.70 that was reported in the same period last year.
The company reported revenue of $3.50B to beat the consensus analysts’ estimate of $3.47B by 0.92%. The reported revenue marks a 6.5% annual increase over the revenues reported in the same quarter last year. More inspiring is the fact that the company reported that Cash from operations increased to $128.4 million at the end of the first half of 2014 from $58.3 million in the first half of fiscal 2013.
Reasons to Buy CHRW Calls
Strategic Positioning in Third-Party Logistics Services
C.H. Robinson has been voted as the Top 3PL (third-party logistics) company for the fourth consecutive year by the logistics community. I strongly believe that the company will be able to exploit its vantage position in the industry to expand its current line of services. The demand for 3PL services is on an increase as more shippers continue to realize the value inherent in one-stop solutions for freight-forwarding requirements.
C.H. Robinson’s market leadership as evident in the deployment of advanced technology and huge service capabilities in the truck brokerage industry should help the company capture significant market share. I also believe that the company has the capacity to expand its service beyond the truck brokerage market going forward.
Strategic Entry Into High-Growth Markets
C.H. Robinson is strategically making roadways into higher growth markets of Europe and Asia. C.H Robinson investors are still lauding the company’s acquisition of Poland-based freight forwarder – Apreo Logistics in 2012. The company also made some strategic moves to establish a presence in Europe as it seeks to meet the need in the European truck industry.
For instance, the company has opened a new office in Istanbul, Turkey and it started operations in another office in Basel, Switzerland. More so, the company has opened an office in Innsbruck, Austria as part of plans to expand its local office coverage throughout Europe. It might also interest you to know that the company is benefiting from growth in emerging markets such as China where there are long-term prospects for 2-way freight forwarding business.
How to Trade CHRW Options
From the foregoing, it is obvious that I am bullish on C.H. Robinson as I expect the company to wax stronger in the global logistics industry. An RSI of 51.15 tells me that the market is relatively neutral on this stock but the last earnings surprise suggests that the stock will lean northbound. I am setting my sights on the CHRW Jan 2015 65.000 call (CHRW150117C00065000) at an asking price of $4.10.
— Daily Option Alerts