As the head of a shipping logistics company, Doug Waggoner has a front-row seat to the country's commerce. The chairman and CEO of Echo Global Logistics (Nasdaq: ECHO ) sees who's shipping what to where and is able to use that as a barometer of the economy. And while he admits he's neglected his personal investing over the past year -- he has a good excuse: he's been busy taking his company public -- he maintains a watchlist of the businesses that seem poised to capitalize on the economic mood. (By the way, you can now create your own version at MyWatchlist.com, your free customized hub to follow the performance and Fool coverage of the companies you care about.)
Capitalizing on a major trend
At the top of Waggoner's watchlist are the companies that play a role in feeding the world. While agriculture might not necessarily be sexy, growing populations and improving economies mean that more people will be able to afford to consume more while enjoying healthier diets. That bodes well for PotashCorp (NYSE: POT ) , the world's largest fertilizer company by capacity. The company shot up nearly 40% after BHP Billiton made a hostile bid for the fertilizer miner earlier this year and has trickled back down since then. Mosaic (NYSE: MOS ) has seen a similar price increase and also stands to benefit from the multiple tailwinds. "As long as there's demand for agricultural products," says Waggoner, "there will be a demand for the products that Potash and Mosaic are supplying."
Along those lines, Waggoner is also watching Archer Daniels Midland (NYSE: ADM ) , one of the world's largest agricultural processors. ADM's massive scale, exposure to emerging markets, and relatively inexpensive valuation make it worth watching as a potential long-term play, and its 2.1% dividend yield is a nice bonus.
His area of expertise
Another industry that Waggoner's watching intently is a bit closer to home for his company. Echo serves as the middleman for shippers and the companies that need their goods transported, increasing volume for the former and lowering costs for the latter. As a result, he's keenly aware of the investment opportunities that await asset-based transportation companies, those business that have invested in the trucks and networks to move the nation's goods. Their business is tied tightly to the economy, so the recession was brutal for this industry, with widespread layoffs and cutbacks in the size of their fleets.
Today, as the economy begins its recovery, the asset-based transportation companies "are as lean and mean as they can be," and any incremental increase in revenue drives more than ever to operating income, Waggoner says. He's reticent to call out individual businesses (since he partners with many of them, he doesn't want to appear to be playing favorites), but J.B. Hunt Transport (Nasdaq: JBHT ) and Con-way (NYSE: CNW ) are key operators here that are worth watching, and Old Dominion Freight Line (Nasdaq: ODFL ) is a smaller but emerging player. Waggoner was willing to confirm that all three are excellent companies, and all are well-positioned to be among the companies riding the industry's slimmed-down roads to profit.
And that's why it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above:
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