Market experts opine that the transportation world is surrounded by tech-infused transformation, which creates significant opportunities for investors to go long on TaaS (transportation-as-a-service) stocks. The digital transformation that is being experienced by the transportation sector continues to make delivery services more accessible and customized.
As per Introspective Market Research, factors including the need for on-demand, affordable, and eco-friendly transport solutions are expected to drive the growth of the transportation-as-a-service market.
Technological advancements including self-driving cars are some of the prominent factors, with healthy improvement in connectivity. Smart cities and the application of loT, primarily in the transportation sector, should also act as contributing factors.
How Technological Advancements Will Drive Growth of the TaaS Market?
The TaaS market saw a transformative shift over the recent past, courtesy of the integration of Artificial Intelligence (Al) and Machine Learning (ML). Al-powered systems tend to optimize fleet operations by analyzing real-time and historical data, predicting vehicle demand, and suggesting efficient routes. ML algorithms focus on analyzing user behavior, preferences, and travel history to offer recommendations. Therefore, both the technologies, Al and ML, have transformed demand forecasting and predictive analytics.
As per Successive Digital, deep learning models, mainly Recurrent Neural Networks (RNNs) and Long Short-Term Memory (LSTM) networks, are proficient enough to capture temporal dependencies in data, which helps in demand forecasting. Notably, ML models like ARIMA (Autoregressive Integrated Moving Average) and Prophet are used to predict future demand by studying time-series data.
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Key Trends to Watch Out in 2025
One of the most important trends likely to drive the growth of the TaaS market in 2025 is the rapid adoption of EVs. The global push towards sustainability continues to support the growth of the EV market. Introspective Market Research believes that stringent emission standards set by governments and incentives provided for EVs continue to support the adoption. Furthermore, the development of battery systems focused on enhancing the driving range and cutting down the cost of EVs should make them affordable to consumers.
Next, Mobility as a Service (MaaS) integration should continue to fuel growth in the TaaS market. MaaS platforms focus on the convenience of users by offering a one-stop app where people can locate modes of transport such as buses, trains, bicycles, ride-hailing, etc. As per Introspective Market Research, the evolution of digital technologies like real-time data and analytics, mobile applications, and loT supported the growth of MaaS. These technologies focus on integrating and managing different forms of transport services.
With strong growth prospects of the TaaS market, let us now have a look at the 10 Best TaaS Stocks to Invest in According to Hedge Funds.
A medium-duty delivery truck on a road between two cities, symbolizing the company’s commitment to transportation.
Our Methodology
To list the 10 Best TaaS Stocks to Invest in According to Hedge Funds, we conducted extensive research and scanned through several online rankings. After getting an initial list of 25-30 stocks, we filtered out the ones having high hedge fund holdings. Finally, the shortlisted ones were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best TaaS Stocks to Invest in According to Hedge Funds
10) Joby Aviation, Inc. (NYSE:JOBY)
Number of Hedge Fund Holders: 12
Joby Aviation, Inc. (NYSE:JOBY) is a vertically integrated air mobility company, which is engaged in building an electric vertical take-off and landing aircraft optimized to deliver air transportation as a service in the US and Dubai. The company focuses on providing transportation solutions on a service basis rather than through individual ownership.
Wall Street believes that a successful partnership with Mukamalah Aviation in Saudi Arabia should boost Joby Aviation, Inc. (NYSE:JOBY)’s revenue by leveraging strategic opportunities in a rapidly growing market for advanced air mobility (AAM). The direct sale of aircraft to business customers such as Mukamalah and government partners like the US Department of Defense forms one pillar of Joby Aviation, Inc. (NYSE:JOBY)’s commercialization strategy.
The influx of cash should offer Joby Aviation, Inc. (NYSE:JOBY) crucial funding for scaling up production and continuing research and development efforts. Next, successful launches in markets such as Dubai and Saudi Arabia should serve as a proof of concept for the company’s eVTOL technology, potentially attracting additional partners and customers worldwide.
As Joby Aviation, Inc. (NYSE:JOBY) establishes a track record of successful operations in diverse environments, it is expected to strengthen its position in negotiations with other potential clients and regulators. Joby Aviation, Inc. (NYSE:JOBY)’s technical talent, market position, and progress in FAA certification should remain healthy. Joby Aviation, Inc. (NYSE:JOBY)’s recent accomplishments, like delivering its first eVTOL to Edwards Air Force Base ahead of schedule, strengthen confidence.
9) Expeditors International of Washington, Inc. (NYSE:EXPD)
Number of Hedge Fund Holders: 29
Expeditors International of Washington, Inc. (NYSE:EXPD) offers logistics services worldwide. It does not own transportation assets like aircraft, ships, or trucks. Instead, the company leverages a network of carriers and partners to offer flexible and efficient logistics solutions. Therefore, by coordinating and managing transportation services on behalf of clients, it allows businesses to access logistics solutions without the need to invest in their own transportation infrastructure.
One critical trend that should support Expeditors International of Washington, Inc. (NYSE:EXPD)’s business is the recent surge in ocean spot rates, particularly in the Transpacific trade lane. The rise is expected to translate into potential benefits for freight forwarders in the near term. The improved rate environment should support the earnings. Higher rates should result in increased revenue per shipment, which could drive substantial top-line growth for Expeditors International of Washington, Inc. (NYSE:EXPD).
Amidst higher air freight costs, the surge in ocean rates should continue to help offset these expenses, leading to improved profitability. The surge in ocean rates is expected to result in higher freight volumes. Expeditors International of Washington, Inc. (NYSE:EXPD) can capitalize on this trend by expanding its service offerings and entering new markets, further diversifying its revenue streams.
Furthermore, the company’s expertise in navigating complex shipping environments should enable it to offer value-added services to clients struggling with the volatile rate environment. This is expected to result in higher market share.
8) Matson, Inc. (NYSE:MATX)
Number of Hedge Fund Holders: 30
Matson, Inc. (NYSE:MATX) is engaged in the provision of ocean transportation and logistics services. The company employs advanced technology to streamline operations. Therefore, it focuses on emphasizing transportation networks.
Wall Street analysts believe that Matson, Inc. (NYSE:MATX)’s China service will continue to perform well, with elevated freight rates expected moving forward. They remain optimistic about continuing this momentum, leveraging its competitive advantages to drive further revenue growth.
In Q3 2024, within Ocean Transportation, Matson, Inc. (NYSE:MATX)’s China service was the primary driver of the increase in consolidated operating income YoY. It saw traditional peak season with strong freight demand resulting in significantly higher YoY freight rates for both the CLX and MAX services.
Analysts have noted a recent trend of customers transitioning from air freight to Matson, Inc. (NYSE:MATX)’s expedited ocean services, such as CLX and MAX. These are among the fastest and most reliable in the Transpacific trade. They opine that this shift should offer a better value proposition, contributing to increased volumes and revenue.
Furthermore, Matson, Inc. (NYSE:MATX) announced significant investments in its fleet, including the construction of 3 new Aloha Class vessels. These investments are part of its strategy to enhance shipping capacity and strengthen its position in the competitive container shipping industry. The new Aloha Class vessels should bolster the company’s ability to compete in the high-demand Transpacific and Hawaii shipping markets, resulting in sustainable revenue growth.
The London Company, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Matson, Inc. (NYSE:MATX) – MATX ocean freight services are benefiting from rising shipping rates and improving market conditions. Global ocean freight pricing has been driven up by the ongoing disruption in the Red Sea, coupled with ramping peak season demand and healthier trade volumes. MATX’s success since the onset of the pandemic has led to permanent volume additions in the China trade lane, a transformed balance sheet. and significant share count reduction. MATX remains strategically positioned as a US Jones Act shipping operator and its expedited freight service continues to offer an attractive value proposition for its customers.”
7) C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)
Number of Hedge Fund Holders: 30
C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) offers freight transportation services. While operating under an asset-light business model, it does not own transportation equipment. However, it leverages a vast network of carriers and advanced technology to manage freight transportation for its clients.
C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) continues to invest in new digital platforms, which should result in enhanced capacity. These technological advancements are expected to improve the average gross profit in the core North American Surface Transportation (NAST) business. The rollout of new operating plans should have a positive impact on C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)’s execution and performance.
These digital platforms are expected to optimize the process of matching shippers with carriers, resulting in cost reduction and improvement in service quality. The investments into advanced analytics and machine learning capabilities should provide C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) with better visibility into market trends, enabling more strategic decision-making and pricing optimization.
As more shippers and carriers adopt C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)’s digital platforms, it is expected to benefit from network effects, making the services more valuable and creating barriers to entry for competitors.
The company is also focused on reducing costs and has implemented a new lean operating approach. Wall Street analysts believe that cost savings are expected to be reinvested in technology and strategic initiatives, resulting in new revenue streams or further efficiencies. A more efficient cost structure can allow C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) to be more competitive in pricing while maintaining profitability.
6) Domino’s Pizza, Inc. (NYSE:DPZ)
Number of Hedge Fund Holders: 32
Domino’s Pizza, Inc. (NYSE:DPZ) is a global leader in pizza delivery and carryout services, carrying out services via a network of company-owned and franchised stores. The company has integrated advanced logistics and delivery systems into its business model, which aligns it with TaaS principles. As a result of this integration, the company continues to play a significant role in transporting food.
Domino’s Pizza, Inc. (NYSE:DPZ)’s performance is assessed not by its revenue but by system sales. From this, the company earns a consistent 10% commission on US retail sales and 3% on international sales, forming the bulk of its gross profit. Domino’s Pizza, Inc. (NYSE:DPZ) remains a highly attractive investment opportunity because of its strong market position, consistent profit growth, and innovative approach to both operations and capital allocation.
Domino’s Pizza, Inc. (NYSE:DPZ)’s strong business model, combined with its ability to adapt to changing market conditions, places it well for continued long-term success. It has built a reputation as a tech-savvy, innovation-driven company, leveraging creative approaches to fuel growth. Domino’s Pizza, Inc. (NYSE:DPZ)’s strong customer data to provide tailored offers and promotions should help order frequency and average ticket size.
A partnership between Domino’s Pizza, Inc. (NYSE:DPZ) and DoorDash should significantly support the former’s growth and operations in several strategic ways. DoorDash possesses a vast network of customers who regularly use its platform. Partnering with DoorDash enables Domino’s Pizza, Inc. (NYSE:DPZ) to tap into this audience, potentially reaching customers who might not otherwise order directly through Domino’s app or website.
5) GXO Logistics, Inc. (NYSE:GXO)
Number of Hedge Fund Holders: 33
GXO Logistics, Inc. (NYSE:GXO) is a global leader in contract logistics, specializing in order processing for online retailers, including inventory picking, packing, and shipping to meet fast delivery demands. By leveraging advanced technology and a vast network of carriers, the company provides logistics solutions without owning the transportation assets themselves. As a result, the clients can access scalable and flexible transportation services tailored to their specific needs, which reduces the need for significant capital investment in transportation infrastructure.
GXO Logistics, Inc. (NYSE:GXO) generates revenue via long-term contracts with its clients. It provides 2 contract types: open-book (cost-plus) and hybrid closed-book, which is a blend of cost-plus and fixed-price elements.
The open-book (cost-plus) is a type of pricing structure that ensures transparency between GXO Logistics, Inc. (NYSE:GXO) and its clients regarding the costs incurred. The hybrid closed-book model combines elements of both closed-book and open-book pricing approaches. This model provides flexibility in pricing while balancing cost transparency and operational efficiency. These pricing structures offer prospects for stable margins and revenue visibility.
Wall Street analysts believe that GXO Logistics, Inc. (NYSE:GXO) is well-placed to achieve growth in 2025 as it will benefit from the megatrends of e-commerce growth and the increasing complexity of supply chains. In Q3 2024, the company secured approximately $226 million in new business, bringing the YTD total to ~$750 million. Notably, over half of these new contracts were in e-fulfillment, underscoring the growing demand for e-commerce logistics solutions.
With healthy international exposure, GXO Logistics, Inc. (NYSE:GXO) is likely to also benefit from outsourcing trends. As outsourcing trends grow across industries, the company’s revenues will be fueled by its focus on automation, sustainability, scalability, and tailored solutions.
Mar Vista Investment Partners, LLC, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Although we believe in GXO Logistics, Inc.’s (NYSE:GXO) long-term growth outlook for logistics and warehouse automation, we decided to sell our investment to make room for investment opportunities with what we believe to be stronger, long-term expected returns.”
4) United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 43
United Parcel Service, Inc. (NYSE:UPS) is a package delivery company that provides services such as transportation and delivery, distribution, contract logistics, ocean freight, and airfreight, among others. The company’s integrated delivery and logistics business model leverages its network to offer end-to-end solutions, managing the entire logistics process, such as transportation, warehousing, and distribution. By integrating advanced technology and leveraging both owned and crowdsourced assets, the company offers flexible, efficient, and scalable transportation solutions.
United Parcel Service, Inc. (NYSE:UPS)’s strategic focus on expanding its market share among small and medium-sized businesses (SMBs) provides a significant opportunity for future revenue growth. By reducing its reliance on large enterprise customers, the company is expected to create a higher-margin revenue stream. This is because SMBs often need more comprehensive logistics solutions, including value-added services that can command premium pricing.
Analysts view that United Parcel Service, Inc. (NYSE:UPS)’s emphasis on SMB business comes at a time when many such businesses are rapidly expanding their online presence. This should help create increased demand for shipping services that United Parcel Service, Inc. (NYSE:UPS) is well-positioned to capture. The company’s focus was further bolstered by its investments in digital platforms and tools tailored for SMBs. These can create stronger customer relationships and increase switching costs, leading to higher customer retention and lifetime value.
As United Parcel Service, Inc. (NYSE:UPS) becomes a trusted partner for SMBs, it will have an opportunity to leverage these relationships to sell additional services across its portfolio, including international shipping and supply chain solutions.
Artisan Partners, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“We made no new purchases in Q3. Instead, our purchase activity was focused on adding to a few of our existing names that remain cheap, such as Dollar General and United Parcel Service, Inc. (NYSE:UPS). When we initiated our position in UPS in late 2023, shares were under pressure due to concerns about its new labor contract diverting volumes and driving up costs, as well as the continued normalization of volumes following COVID-related gains. We welcomed the market’s short-term focus as it provided us an opportunity to purchase UPS at an undemanding valuation of less than 11X our view of normalized earnings. UPS is a good transport operation that easily earns its cost of capital, generates significant free cash, has a wide economic moat, has a strong financial profile and pays an attractive dividend—now yielding 4.8%. More recently, the stock has been weak because profits came in weaker than expected. UPS’ customers traded down to the lower yielding ground segment, which negatively impacted overall pricing and margins. These shifts are common and occur in both directions, but what is important, in our view, is the long-term trend of volume growth remains intact. Nevertheless, investors have lost patience with UPS after a string of earnings disappointments.”
3) Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 51
Lyft, Inc. (NASDAQ:LYFT operates a peer-to-peer marketplace for on-demand ridesharing in the US and Canada. The company operates a peer-to-peer marketplace for ridesharing, allowing users to request rides via its app. These are then fulfilled by a network of drivers using their personal vehicles. Thus, the company provides on-demand transportation without the need for vehicle ownership.
Lyft, Inc. (NASDAQ:LYFT) continues to focus on product innovations targeted at increasing rider growth and frequency. These include the introduction of new features such as Price Lock, which focuses on retaining and acquiring customers by offering predictable pricing. Wall Street believes that this innovation should result in increased user adoption and ride frequency. Furthermore, Lyft, Inc. (NASDAQ:LYFT) introduced 33 new products and features in 2024 and plans to enhance its service offerings.
Next, Lyft, Inc. (NASDAQ:LYFT)’s focus on strengthening its ride-sharing business should drive long-term growth. The company plans to introduce autonomous vehicles next year. Furthermore, it plans to establish partnerships with Mobileye Global and May Mobility. The introduction of AVs will eliminate the need for human drivers, reducing labor costs, one of the significant expenses in Lyft, Inc. (NASDAQ:LYFT)’s current ride-hailing model. With lower operating costs, the company can offer more competitive pricing.
This should attract price-sensitive customers and enhance its market share. Furthermore, autonomous fleets can be scaled more easily. This can help in expansion into new markets and growth in user engagement. As a result of this growth, Lyft, Inc. (NASDAQ:LYFT) can also enhance its take rates, which measure the percentage of revenue the company retains after paying drivers.
2) DoorDash, Inc. (NASDAQ:DASH)
Number of Hedge Fund Holders: 73
DoorDash, Inc. (NASDAQ:DASH) is a food delivery and logistics platform that connects customers with local restaurants, grocery stores, and other businesses. The company connects consumers with local restaurants and delivery personnel through its digital marketplace. The company’s business model allows consumers to order food from a wide selection of restaurants via the DoorDash app or website, with deliveries fulfilled by Dashers (delivery drivers) using their personal vehicles.
The company generates revenue from commissions charged to merchants, delivery fees, advertising and promotions, logistics-as-a-service, etc. Moving forward, DoorDash, Inc. (NASDAQ:DASH) plans to deliver food and almost everything such as alcohol, beauty products, and sports goods, among others. This will help expand its total addressable market, which remains critical for long-term growth and should drive revenue growth substantially. As per Wall Street analysts, as and when its non-food categories gain traction and the transformation matures, DoorDash, Inc. (NASDAQ:DASH) should be able to improve its margins.
As per Fortune Business Insights, the US foodservice market size was valued at US$824.61 billion in 2022 and should grow from US$905.13 billion in 2023 to US$1,767.54 billion by 2030, demonstrating a largely untapped opportunity. DoorDash, Inc. (NASDAQ:DASH)’s strong user engagement indicates a potential for continued growth through increased penetration and order volume.
Apart from the growth prospects of the US food service market, the company should benefit from international expansion. The recent acquisition of Wolt has provided DoorDash, Inc. (NASDAQ:DASH) with a foothold in international markets, offering significant growth potential. Wolt is known for its user-friendly app and advanced logistics technology. DoorDash, Inc. (NASDAQ:DASH) can leverage this technology to optimize its operations, improve delivery efficiency, and enhance the customer experience.
TimesSquare Capital Management, an equity investment management company, released its third-quarter investor letter. Here is what the fund said:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. DoorDash, Inc. (NASDAQ:DASH), an online food delivery platform and logistics provider, climbed 31%. We had begun building our initial position in DoorDash in May-June timeframe and ramped up the position size prior to the second quarter earnings report that was released in August. DoorDash delivered broad-based positive results versus street expectations.”
1) Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies, Inc. (NYSE:UBER) is engaged in developing and operating proprietary technology applications. The company operates via 3 segments: Mobility, Delivery, and Freight. The company operates a multisided platform that connects riders seeking transportation with drivers providing their services. The company eliminates the need for vehicle ownership among consumers, providing flexible and cost-effective mobility options.
Wall Street analysts opine that Uber Technologies, Inc. (NYSE:UBER)’s mobility (ride-hailing) and delivery (food and retail delivery) businesses should continue to demonstrate resilience and expansion as a result of expected growth in gross bookings. Expansion of new verticals and into new markets (freight services and healthcare transportation), integration of advanced technologies (such as Al and data analytics, and AVs), and expansion of core ride-hailing business are some of the factors likely to support gross bookings.
Uber Technologies, Inc. (NYSE:UBER) remains focused on suburban areas, where it expects potential for increased service reliability and demand attraction. This strategy emphasizes capturing a larger share of the transportation market beyond urban centers. Furthermore, the company remains focused on its autonomous vehicle strategy. This has evolved from developing its own AV capabilities to establishing partnerships with leading AV companies. As a result, Uber Technologies, Inc. (NYSE:UBER) can potentially benefit from AV advancements without bearing the impact of cost and risk of in-house development.
Uber Technologies, Inc. (NYSE:UBER)’s extensive user base and platform should make it an attractive partner for AV technology providers planning to deploy their vehicles at scale. Raymond James initiated a coverage on the shares of Uber Technologies, Inc. (NYSE:UBER) on 24th September. They gave a “Strong-buy” rating and a $90.00 price target.
While we acknowledge the potential of UBER as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than UBER but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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