2 high-quality US mid-cap stocks to consider
Ariel's John Rogers discusses why he likes Jones Lang LaSalle and Stericycle.
Mentioned: Jones Lang LaSalle Inc (JLL)
Christopher Franz: Hello, I'm Chris Franz with Morningstar. I'm here today with John Rogers, Chairman, CEO, and CIO of Ariel Investments.
John, thanks for joining me.
John Rogers: Great to be here.
Franz: So, John, you've managed Ariel Fund since 1983 and you've owned Jones Lang LaSalle for almost 18 years. What makes that such a good long-term holding?
Rogers: Well, we think Jones Lang LaSalle is an extremely, extremely well-managed company and they are in a great business. They are in a duopoly. They compete with CBRE when it comes to real estate services. People need to lease property around the world. People buy and sell real estate all around the world. More and more outsourcing is happening, and large companies will hire a firm like JLL to manage all their real estate throughout the world. And then, finally, they have an investment management division where large pension funds that believe in alternative investments can hire JLL to pick real estate for them. And so, they have all these sectors that are doing well. It's a global brand. There's really truly a moat around it where you only have--only CBRE is the real global player that can compete. So, they are well positioned to grow as the economy grows around the world.
Franz: You recently bought Stericycle in 2018, in the market sell-off. Just kind of curious what you like about that stock.
Rogers: Well, Stericycle is very, very cheap. It's one of the things we like about it. It sells at a significant discount to the private market value and the work that we've done to value the company. But they have, we think, a very significant moat when it comes to the medical care industry, where they are like the Waste Management of the healthcare industry. You've got to get rid of things from a hospital, a doctor's office, a dental office, the disposable needles, all the different products that have to be disposed of in a very careful and selective way. Stericycle leads that part of the economy. As we talk to customers of theirs, major hospitals around the world and around the country, everyone uses Stericycle to remove medical waste. It's a core competency that they have and it's very, very hard to find any significant competitors of scale for Stericycle. They also own Shred-It and we think they are going to be able to blend the logistics of the Shred-It brand and their routes with the Stericycle routes, and be able to be more efficient and cost-effective ,and be able to generate more and more profits there. And finally, they have a new CEO, a relatively new chairman of the board, bringing fresh energy in to get the company back on track after some significant setbacks over the last couple of years.
Franz: Great. Well, John, I appreciate your insights.
Rogers: Great to be here.
Franz: For Morningstar, I'm Chris Franz. Thanks for watching.