In this article, we will discuss: 10 Best Transportation Stocks to Buy According to Hedge Funds.
Transportation stocks are those of companies classified as industrial businesses, which range from heavy equipment manufacturers to transportation service providers.
According to the Business Research Company, the transport market has expanded significantly in recent years. It is projected to rise from $6941.93 billion in 2024 to $7522.07 billion in 2025, with a compound annual growth rate of 8.4%. Economic expansion, population increase, technical improvements, and consumer behavior are all factors that contributed to historical growth. Meanwhile, the transportation sector is anticipated to boom significantly in the next few years. It will reach $9968.7 billion in 2029, with a compound annual growth rate of 7.3%. Regionally, Western Europe had the largest transport market in 2024. Asia-Pacific was the second-largest inland water transport market.
As of February 22, 2025, the broader market’s transportation industry had returned 3.14% in the previous year, 5.25% in the previous five years, and 4.85% over the last ten. However, performance was negative, at 2.24% year to date and 0.80% over three years.
According to S&P Global’s report, despite a minor slowdown in GDP growth to 2.0% from 2.7% in 2024, the transportation infrastructure industry in the United States is anticipated to experience consistent demand and expansion in 2025. While volume growth in enplanements, port containers, transit ridership, and automobile traffic may moderate, most modes of transportation will continue to grow through 2027. Public transit ridership is projected to stay at 90% of pre-pandemic levels unless external factors, such as reduced remote work or congestion pricing, boost demand. Meanwhile, enplanements, port container traffic, and vehicle travel are likely to stay above pre-pandemic levels, resulting in stable financial performance for this market.
Looking forward, as per Harris William’s report, the transportation and logistics sector is expected to grow rapidly in 2025, propelled by M&A activity and economic recovery. The automotive and heavy-duty aftermarkets remain resilient due to higher maintenance demand as new car prices rise. Investors are attracted to non-discretionary services such as repairs and fleet management. Third-party logistics (3PL) is evolving with technologically advanced solutions to optimize supply chains. Transportation infrastructure services (TIS) continue to draw investment due to their critical role in maritime, rail, and road networks. Companies that provide important, high-demand solutions have growth potential, making the sector a prime target for capital deployment and innovation.
Frank Mountcastle Head of M&A Group, Head Managing Director, commented:
“The transportation and logistics industry’s mix of established and emerging growth drivers will continue to attract a wide set of investors,” “The future is bright for businesses that embrace technology to create efficiencies and add more value while bringing specialized capabilities and a broader array of solutions to their customers.”
According to the PWC’s Transportation and Logistics: US Deals 2025 outlook, the U.S. transportation and logistics industry saw $51.5 billion in deal value across 71 announced transactions in the six months ended November 15, 2024, up from $39.5 billion and 69 agreements in the previous period. This growth shows that investor confidence is rising in line with improved profitability. The transportation and logistics (T&L) sector is seeing an increase in dealmaking due to strong economic conditions and investor confidence. Following the Federal Reserve’s first rate decrease in over four years and the next administration’s deregulatory agenda, M&A activity is expected to revive. While financial purchasers’ participation has slowed, strategic participants are driving transactions, particularly as freight rates and profitability stabilize. Trucking consolidation, railroad logistics innovation, and technological developments in logistics are all key themes to keep an eye on. To profit on the expected market rebound, dealmakers will need agility in fundraising, talent retention, and a strong M&A playbook.
Darach Chapman, US Transportation and Logistics Deals Leader, stated:
“T&L deals activity is set to rebound, driven by demand recovery and supply rationalization. However, macro factors such as trade policy and deregulation will continue to shape M&A opportunities.”
With that said, here are the 10 Best Transportation Stocks to Buy According to Hedge Funds.
A fleet of freight trucks parked in sequence, showcasing the efficiency of the company’s freight transportation.
Methodology:
We sifted through holdings of Transportation ETFs and online rankings to form an initial list of 20 transportation stocks. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of over 1,000 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Market Cap as of February 22 as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. American Airlines Group Inc. (NASDAQ:AAL)
Number of Hedge Fund Investors: 59
One of the Best Transportation Stocks, American Airlines Group Inc. (NASDAQ:AAL) is a leading holding company that operates a large network of air transportation services. The business operates under the American Eagle brand via regional subsidiaries and third-party regional airlines, providing scheduled flights for people and cargo. Its broad network connects major US hubs and international gateways, including London, Sydney, and Tokyo. American carriers have the youngest fleet among major US carriers, resulting in lower medium-term capital expenditure needs than certain competitors.
American Airlines Group Inc. (NASDAQ:AAL) reported strong full-year results for 2024, with record revenue of $54.2 billion, up from $53 billion in 2023, a 2.70% growth YoY. Operating cash flow totaled $4 billion, while free cash flow was a record $2.2 billion. The company also lowered its debt by $15 billion, reaching its target a year ahead of time. Despite operational problems such as weather-related issues, the airline maintained resilience, ranking second among US carriers in completion factor and on-time departures.
The U.S. Department of Transportation fined American Airlines Group Inc. (NASDAQ:AAL) $50 million for providing inadequate wheelchair assistance. It has since pledged to invest $175 million to improve these services. In a big step towards improving its loyalty program, the firm signed a 10-year exclusive co-branded credit card partnership with Citi, which will begin in 2026. It is intended to boost its revenue and strengthen its position in the competitive loyalty field.
9. Norfolk Southern Corporation (NYSE:NSC)
Number of Hedge Fund Investors: 63
Market Capitalization as of February 22: $56.10 billion
Norfolk Southern Corporation (NYSE:NSC) is a rail transportation firm that transports both raw materials and finished commodities. From the beginning of the rail renaissance in 2004 to 2008, the company had the highest margins among US Class I railroads. Its operational ratio (expenses/revenue) declined in 2009 during the Great Recession and maintained between 69% and 73% from 2010 to 2015. This fell short of the improvements made by Union Pacific and Canadian Pacific, who did not have Norfolk’s exposure to Appalachian coal. However, by 2017, the business was back on pace, with an adjusted 60.1% OR in 2021, due to improved pricing execution and the adoption of precision railroading concepts, which resulted in more effective use of locomotive assets and labor.
Norfolk Southern Corporation (NYSE:NSC)’s fourth-quarter 2024 revenue declined 1.5% year on year due to lower fuel surcharges and softer benchmark coal rates (which reduced yields), slightly offset by core merchandise pricing increases and slightly higher overall traffic. Despite reduced revenues, consolidated profitability improved significantly. Q4 earnings per share grew to $3.23 from $2.32 in the previous year. Norfolk Southern operates “tighter and faster.” The operating ratio rose to 65.8% for the full year. The stock has surged by more than 5% so far in 2025, making it one of the Best Transportation Stocks. The company has a strong capital expenditure plan of $2.2 billion for 2025, and while share buybacks were paused because of the East Palestine issue, they will resume as well.
RBC Capital boosted Norfolk Southern Corporation (NYSE:NSC)’s price objective to $286 from $275, keeping an Outperform rating on the stock. The company’s Q4 results were in line with expectations, but the firm was encouraged by its strong operating momentum, which allowed the firm to exceed its previous guidance on efficiency, according to an analyst in a research note. RBC reiterates that the company’s continuing operating progress leads to a fundamental shift in how its cost structure is regarded, followed by a significant share re-rating.
8. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Investors: 63
Market Capitalization as of February 22: $62.29 billion
CSX Corporation (NASDAQ:CSX) is an American transportation corporation that focuses on railroad operations. Hunter Harrison, the railroad turnaround legend, managed Eastern Class I railroad CSX from early 2017 until his death in December of the same year. Harrison’s replacement, James Foote (who retired in late 2022), was familiar with Harrison’s precision scheduled railroading methodology from his years at Canadian National. PSR’s major focus is on rightsizing assets such as real estate, sorting yards, motive power, and rolling stock. Fewer assets and longer trains increase network fluidity, resulting in increased labor productivity, improved service levels, and higher potential additional operating margins. Better service also opens up more potential for multimodal transportation, which is extremely competitive with trucks. The company’s intermodal traffic is facing near-term headwinds from depressed pricing in the competitive full truckload market, but this pressure is easing, and the company continues to see intermodal as a key long-term growth prospect.
CSX Corporation (NASDAQ:CSX) recorded a 2% volume gain for the year, outpacing the larger industrial economy, with intermodal volume up 4% YoY in Q4 2024. Despite headwinds from lower fuel surcharges and softening metals markets, the company’s merchandise segment increased revenue by 3%. Customer satisfaction increased, as evidenced by its highest-ever Net Promoter Score in Q4. Furthermore, the Howard Street Tunnel project was shortened from three years to 6-8 months to improve operating efficiency.
The stock has risen by 0.44% year to date, making it one of the Best Transportation Stocks. Analysts remain optimistic about the company’s future, pointing out that domestic shipments account for a sizable amount of CSX Corporation (NASDAQ:CSX)’s income. They believe that the company’s domestic activities will develop as firms increasingly attempt to obtain products from within the United States rather than relying on international manufacturers.
7. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Investors: 65
FedEx Corporation (NYSE:FDX) is among the Best Transportation Stocks. It is a global transport and logistics company that offers rapid shipping, ground delivery, freight transportation, and business services. Despite near-term volume pressure from limited store restocking and lackluster industrial end markets, its US ground and foreign express delivery operations could benefit from longer-term e-commerce development. FedEx CEO Raj Subramaniam expressed confidence that the company’s massive worldwide network will help it handle supply chain disruptions. He highlighted potential trade concerns, such as tariff increases, but underlined that the firm handles 99% of global business and can adjust capacity as needed.
FedEx Corporation (NYSE:FDX) spent $820 million on capital expenditures in the second quarter of fiscal year 2025, putting its total capital expenditure for the year at $5.2 billion. The company also continues to generate strong free cash flow and repurchased $1 billion in shares, bringing the total repurchases for the year to $2 billion, with another $500 million anticipated for the second half.
On February 6, 2025, FedEx Corporation (NYSE:FDX) purchased RouteSmart Technologies, a global pioneer in route optimization, to improve operational efficiency. The two long-term collaborators anticipate a seamless combination, with RouteSmart continuing to service a variety of industries. RouteSmart will operate independently under FedEx Dataworks, enhancing FedEx’s logistics technology capabilities.
6. Canadian Pacific Kansas City Limited (NYSE:CP)
Number of Hedge Fund Investors: 74
Canadian Pacific Kansas City Limited (NYSE:CP) owns and manages a transcontinental freight rail network in Canada, the United States, and Mexico. Following the appointment of railroading icon Hunter Harrison as CEO in 2012, the company experienced a remarkable profitability recovery. After taking over, Harrison closed multiple intermodal terminals and hump yards to rightsize the network.
Revenues climbed by 3% to $3.9 billion in the fourth quarter of 2024, up from $3.8 billion the previous year, because of volume growth, improved safety performance, and strong operational execution. It enabled Canadian Pacific Kansas City Limited (NYSE:CP) to achieve industry-leading earnings growth in 2024, making it among the Best Transportation Stocks.
In February, Canadian Pacific Kansas City Limited (NYSE:CP) stated that it had negotiated a tentative four-year agreement with the United Steelworkers for clerical and intermodal workers in Canada. In the same month, the Patrick J. Ottensmeyer International Railway Bridge was officially opened with a ceremonial ribbon cutting over the Rio Grande. The $100 million bridge, named after the final KCS president and CEO who died in July 2024, is the only train bridge that connects Laredo, Texas, to Nuevo Laredo, Tamaulipas.
Chris Hohn’s TCI Fund Management was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q4 2024. It owns 54.91 million shares worth $3.97 billion as of Q4.
5. Delta Air Lines Inc. (NYSE:DAL)
Number of Hedge Fund Investors: 83
One of the biggest airlines in the world and the best transportation stocks, Delta Air Lines Inc. (NYSE:DAL) is headquartered in Atlanta and operates a network of more than 300 destinations in more than 50 countries. The firm uses a hub-and-spoke network to gather and transport passengers around the world, with its main hubs in Atlanta, New York, Salt Lake City, Detroit, Seattle, and Minneapolis-St. Paul. Historically, passenger flights over the Atlantic Ocean have accounted for the majority of its international revenue and profits. It operates through airline and refinery segments.
Revenue in 2024 climbed to $14.44 billion, exceeding the consensus forecast of $14.18 billion. Earnings per share came in at $1.85, exceeding analysts’ expectations of $1.78%. Delta Air Lines, Inc. (NYSE:DAL) expects the trend of better-than-expected results to continue into 2025. In 2024, the airline anticipates its revenues to rise by 7% to 9%. It also aims to generate more than $4 billion in free cash, up 18% from 2024. It estimates annual adjusted earnings of more than $7.35 per share for the full year.
Delta Air Lines, Inc. (NYSE:DAL) and its earnings growth prospects are favored by two variables. The first is an increase in non-main cabin ticket sales, which includes premium cabin sales and American Express’s revenue from co-branded credit cards. The second arises from a recently developed airline industry discipline that requires capacity reduction when necessary. American Express’s compensation has also risen from $2 billion in 2010 to an expected $7 billion in 2024, with management aiming for a total of $10 billion. In addition to diversifying Delta’s earnings, the SkyMiles program and credit cards encourage customer participation and loyalty.
4. United Airlines Holdings Inc. (NASDAQ:UAL)
Number of Hedge Fund Investors: 86
United Airlines Holdings, Inc. (NASDAQ:UAL) operates airlines that transport passengers and cargo. Before the pandemic, its strategy centered on cost-cutting while improving margins, which averaged 10.6% between 2015 and 2019. In 2021-22, the company announced a series of aircraft purchases for up to 200 Boeing 787 Dreamliners and 500 narrow-body aircraft, which will join its fleet by 2032. The strategy is to replace less-efficient and smaller jets to substantially boost the average number of seats United can sell on a given flight, with more premium seats and legroom for those willing to pay more. Moreover, it plans to increase plenty of cheap seats that the firm can sell to more leisurely travelers and compete with lower-cost airlines on many of its routes. The stock surged by over 109% in the past 12 months, making it one of the Best Transportation Stocks.
The business posted a record profit in Q4 2024, with pre-tax earnings of $4.2 billion. Furthermore, the company expanded capacity by 6.2% in Q4 2024 compared to Q4 2023, as well as revenue by 7.8%. United Airlines Holdings, Inc. (NASDAQ:UAL) achieved an incredible accomplishment, generating $9.4 billion in operational cash flow and $3.4 billion in free cash flow during the same period.
It reported a $1.5 billion operating profit on $14.7 billion in revenue in the fourth quarter of 2024, exceeding the 10% margin due to high demand during the winter holiday travel season and a 19% drop in quarterly fuel expenses compared to 2023.
TD Cowen analyst Tom Fitzgerald upgraded United Airlines Holdings, Inc. (NASDAQ:UAL) price objective to $165 from $142 and maintained a Buy rating on the stock. The firm was impressed by the company’s earlier results call and felt more confident in their 2025 Best Idea. They believe the business has the potential to capitalize on the present industry dynamic in 2025, with LT investments expected to deliver greater profits in 2026 and beyond.
3. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Investors: 93
One of the Best Transportation Stocks, Union Pacific Corporation (NYSE:UNP) is a rail freight transportation firm. It has a large railroad network over 23 states, and it is actively growing its mainline and terminal capacity by building new sidings and extending old ones. These projects are especially critical in high-growth areas like the Pacific Northwest, where modifications are being made to enable growing exports of soda ash and grain. In the Southwest, attempts are being made to improve intermodal services. In addition, the company is implementing new technology like GPS tracking for containers and rail pulse systems to boost service reliability, provide real-time tracking, and improve customer communication.
The stock has surged by more than 7% so far in 2025. Union Pacific Corporation (NYSE:UNP) had a 5% rise in revenue carloads, which contributed to improved financial results in Q4 2024. Despite a 70-basis-point setback due to the ratification of a crew staffing agreement, its operating ratio grew to 58.7%, representing a 220-basis-point improvement. The operating income rose by 5% to $2.5 billion. Furthermore, management is confident about 2025, with a $4.5 billion share repurchase plan and a capex target of $3.4 billion.
Bernstein analyst David Vernon boosted Union Pacific Corporation’s (NYSE:UNP) price target to $284 from $277, maintaining an Outperform rating on the stock. According to the firm, railroads have transitioned from a consensus-long sector to a very boring group, dragged down by sluggish demand and battling with cost pressure and margin erosion. Bernstein believes that “we are moving past the worst of times.”
Bretton Fund stated the following regarding Union Pacific Corporation (NYSE:UNP) in its Q4 2024 investor letter:
“The main detractor was Dream Finders, taking 1.5% off the fund, and Union Pacific Corporation (NYSE:UNP) was a minor detractor with a -0.2% impact. The rail industry has seen tepid revenue growth the past few years as higher-revenue coal volume declines and is replaced by lower-revenue intermodal volume sourced from ocean and truck carriers. Despite the growth challenge, Union Pacific managed to cut costs and grow earnings per share by 6%. The stock returned -5%.”
2. The Boeing Company (NYSE:BA)
Number of Hedge Fund Investors: 96
The Boeing Company (NYSE:BA) is among the Best Transportation Stocks. It is a major aerospace and defense company. Its main business segments include global services, space and security, military, and commercial aircraft. Boeing’s commercial jet segment competes with Airbus in the production of aircraft capable of carrying more than 130 passengers. The company’s defense, space, and security division makes military aircraft, satellites, and weapons, competing with Lockheed, Northrop, and other companies. Airlines can receive aftermarket support from Global Services.
The Boeing Company (NYSE:BA)’s significant backlog, which includes many years of production for its most popular aircraft, adds to optimism regarding the overall demand for aerospace products.
Following years of safety and manufacturing issues, Boeing Company (NYSE:BA) is making headway in its recovery, notably by focusing on core industries and improving output, which is driving a significant stock rise to 2025. Its monthly 737 MAX deliveries are scheduled to grow from 17 at the end of last year to the high 30s.
Moreover, The Boeing Company (NYSE:BA) plans to generate positive cash flow in the second half of the year, confirming improved operational efficiency and strong product demand. Despite spending more than $14 billion, the company’s cash flow may improve as a result of boosting production rates, which include building 38 aircraft every month. According to the company’s half-trillion-dollar backlog and rising aircraft orders, its long-term prospects as an industrial powerhouse remain promising.
1. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Investors: 166
Uber Technologies, Inc. (NYSE:UBER) is the largest ridesharing company in America. The company dominates both the global and U.S. ride-hailing marketplaces, with 25% of the global market and a remarkable 76% of the US market. The company’s extensive network of 171 million users and a large pool of drivers present major barriers to entry, ensuring its market dominance. This dominance has enabled it to continually achieve tremendous growth in gross bookings and revenue, owing to sustained increases in trips and users.
The stock is up by more than 24% year-to-date as it posted solid Q4 2024 results and upgraded its 2025 guidance, making it the Best Transportation Stock. Uber Technologies, Inc. (NYSE:UBER)’s fourth-quarter performance remains solid despite hurdles such as currency headwinds and temporary setbacks. The company’s gross bookings climbed by 18% year on year, driven by a larger user base and greater travel frequency, resulting in 21% revenue growth. The mobility market showed a 24% growth in bookings, showing the strength of Uber’s business model. These results reflect its constant execution and operational strength, notwithstanding external challenges.
Uber Technologies, Inc. (NYSE:UBER) is well-positioned to benefit from the rise of AVs due to its large user base and established infrastructure. This allows it to collaborate with firms like Waymo or Tesla to smoothly set up autonomous vehicles for its massive audience at a low cost, thereby strengthening its dominance in the future of transportation.
Looking ahead, its growth prospects remain excellent, particularly in its mobility and delivery categories, which offer plenty of opportunity for expansion. The firm’s diverse offerings, which include new services such as Uber for Teens and Uber for Business, have increased customer engagement and contributed to more bookings and rides.
Overall, Uber Technologies, Inc. (NYSE:UBER) ranks first on our list of the 10 Best Transportation Stocks to Buy According to Hedge Funds. While we acknowledge the potential for UBER to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an 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.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. 10 Best Transportation Stocks to Buy According to Hedge Funds is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
