Tariffs could be a near-term headwind for most players in the transportation industry. However, we don’t think investors should reject a name just because of short-term political concerns as long as the company’s prospects are bright and the valuation is attractive.
MTL can be considered a value name in the transportation industry, the company has occasionally implemented M&A in the past, but not at a huge scale, compared to other industry players, MTL also largely maintains the volume rather than growth. Its operational efficiency is getting better in recent years. That being said, MTL is expected to grow around 3% over the next few years. Overall, a value name with decent cash flow but limited growth prospects, we would be comfortable switching to something with a healthier growth profile, such as TFII.