The transportation sector encompasses several sub-sectors, each with its nuances. This diversity requires investors to consider both financial and economic factors. Therefore, it is best to study using the best websites for stock research and this helpful article, Motley Fool Review, to analyze different companies and industries to pick the right transport stock.
In the U.S., the pandemic has significantly impacted supply chain and logistics operations. As a result, demand for food, medical supplies, and other products has been significantly affected. Furthermore, food distributors struggle to balance the inbound orders from farmers with new logistics processes.
What are transportation stocks?
Transportation stocks refer to companies that move goods from one place to another. For example, automobile and airline companies are included in the transportation sector. Transportation companies are generally cyclical and don’t do so well during periods of low economic growth. However, they can be good picks if you can avoid volatile sectors like oil and gas.
Listed below are the seven best transportation stocks to buy now. While these companies represent a diverse range of sectors, they all offer solid opportunities for investors.
United Parcel Service
While the recent pandemic in China may have caused global travel to be shut down until 2020, the transportation industry has not fully recovered. It is still struggling to get back to its pre-pandemic levels as supply chain problems continue to plague the industry. As a result, some transportation stocks are perfectly positioned to benefit from the upcoming economic recovery. In contrast, others may struggle to regain lost business. Regardless, if you’re looking for transportation stocks to invest in, UNP may be a great choice.
UPS is a key contractor to the top e-commerce companies. The company’s biggest challenge will be managing rising fuel prices, especially given the weakening dollar. Nevertheless, investors can comfort that the company is continuously improving its productivity and maximizing its efficiencies. As a result, the current price of UPS is fair. The stock has been up 76% in the past 12 months. However, its price-to-earnings ratio is 104. Therefore, if interested, now is the right time to add to your position.
Uber Technologies
After the pandemic, the company is back and stronger than ever. UBS named Uber its top transportation pick, calling it a winning catch-up trade. The firm also initiated coverage of Lyft, which ranks as a secondary pick. The two companies are on a two-pronged approach:
- They are recovering from the hiccup.
- They have launched a subscription service for rideshare and delivery orders.
Uber Technologies is a hot stock with a $13.8 trillion TAM opportunity in ride-hailing services. Its segments include Mobility, Delivery, and Freight. The company has a monopoly in most markets and has selectively exited markets it lost to local incumbents. Its growth is fueled by the fact that it delivers a significant portion of the population.
XPO Logistics
XPO Logistics (XPO) is a company that specializes in providing truckload and other transportation services. The company is currently spinning off another business called GXO Logistics. In addition, it is considering the sale of its other large corporation. The company is undergoing a significant transformation in preparation for the spinoff. Despite its low price, investors should keep an eye on the company’s RS Rating (RSS), which measures stock performance over the past 52 weeks.
XPO’s latest earnings report came in strong, and its revenues grew to new records. The company is expected to report $1.34 per share for the Q4 2020 fiscal year. Its adjusted net income will be around $155 million to $54 million. This is still a big deal, but it does give investors reason to be excited about XPO.
Nio Inc.
The Cayman Islands-based company NIO Inc. offers used vehicles, inspection, evaluation, and sales services. It is also engaged in strategic partnerships with companies in the auto industry, including Mobileye N.V. The company began as NextEV Inc. before changing its name in July 2017. Its website includes SEC registration details and a list of all documents filed by the company. However, numerous red flags indicate that a company is not as it seems.
NIO, Inc., headquartered in Jiading, China, designs, manufactures, and sells electric vehicles. The company also researches and develops autonomous driving and artificial intelligence. The company launched its first electric car, the EP9, in 2016 and has since introduced two more models within three years. The company also plans to introduce a seven-seater electric SUV, the ES8, and an all-electric sedan, the ES6. It will begin selling its vehicles in June 2019.
Knight-Swift Transportation
The stock has been moving up and down for a long time. But is it a good time to buy? The short answer is yes. Knight-Swift Transportation is one of the best transportation stocks to buy now. If you’re considering investing in the company, consider these three reasons why it’s the best time to buy.
- The stock’s performance in early 2021 has continued to impress. Knight-Swift Transportation is one of the best transportation stocks to buy now because of its solid operating ratios and strong profitability.
- The stock is a bargain. KNIGHT-SWIFT is one of the largest truckload carriers in North America. It recently purchased AAA Cooper Transportation, a smaller trucking company, for $1.35 billion.
- The stock is cheap. Its price-to-book ratio makes it an excellent buy for investors. Its price is still far below its historical average, but the stock is still at a good value.
Ryder
Ryder System Inc., a global logistics company, provides supply chain, dedicated transportation, fleet management, and other business solutions. The company has approximately 280,000 vehicles, employing more than forty thousand people worldwide. According to research firm Gartner, 62% of its revenue comes from its fleet management solutions. This includes leasing trucks and trailers and establishing long-term contracts. However, fleet management solutions have the most significant impact on the company’s earnings and, therefore, are responsible for the highest capital expenditures and depreciation levels.
Why Invest in Freight and Logistics Stocks?
There are some downsides to investing in these companies, but the benefits outweigh the downside. Because transportation companies are closely tied to the economy, they often depend on healthy economic trends to thrive. In the 2020 pandemic, for example, the quarantine measures effectively stopped the global economy, which hurt many transportation companies. As a result, these companies’ shares hit multi-year lows. However, the Dow Jones Transportation Average soared for 13 weeks in 2021, indicating that investors thought the economy would recover.
A good reason to invest in transportation companies in the industry’s resiliency. While many companies were hit hard by the recent coronavirus epidemic, transportation is still one of the most resilient industries in the economy. Investing in these companies can help you reap the benefits of expanding markets and a strong economy. With so much money at stake, owning transportation stocks is not a bad idea.
This post was published on July 26, 2022 6:25 pm