In this article, we will take a look at the 10 transportation as a service stocks to buy. You can skip our comprehensive analysis of these stocks and go directly to the 5 Transportation as a Service Stocks to Buy.
The transportation industry has been of vital importance to the global economy for the past several decades. The Bureau of Transportation Statistics in the United States claims that the demand for transport in 2019 stood at $9 trillion, comprising nearly 9% of the Gross Domestic Product (GDP). Despite huge challenges like trade wars and manufacturing declines, there were signs for further growth of the industry moving forward. However, the COVID-19 pandemic slowed things down in 2020 as travel was curtailed and recession fears realized.
The vaccine rollout over the past few months has enabled a return to normal in a few countries and the transport sector looks set to bounce back. United Parcel Service, Inc. (NYSE: UPS), a package transportation service, easily beat market estimates for profit and revenue in the fourth quarter of 2020. The firm reported a profit of $2.66 per share in the last three months of 2020, beating market expectations by $0.52. United Parcel Service, Inc. (NYSE: UPS) also posted a revenue of $24.9 billion for the same period, beating predictions by $2 billion.
The past few years in the transport sector have also been characterized by technological disruption. The pandemic accelerated advances in some segments of the industry but slowed progress in others. For example, Uber Technologies, Inc. (NYSE: UBER), a ride-hailing service, reported losses of $1.8 billion in the second quarter of 2020, largely as bookings plummeted by nearly three quarters. However, earlier this month, Uber Technologies, Inc. (NYSE: UBER) posted a 24% increase in bookings for the first quarter of 2021, looking set for a comeback.
FedEx Corporation (NYSE: FDX), a delivery service, actually saw business boom during the pandemic. However, FedEx Corporation (NYSE: FDX) was unable to capitalize fully on the opportunity the lockdown provided due to the limits on air cargo capacities and the disruption to global supply chains. With the gradual reopening of the economy this year, FedEx shares have tripled in value from the pandemic lows, driven by record revenue gains. The ground and freight sections of the company are also operating on good margins as business orders increase.
In addition to the traditional power players, new entrants like Tesla, Inc. (NASDAQ: TSLA) also have tremendous growth prospects in the transport industry. Tesla, Inc. (NASDAQ: TSLA) is the largest electric vehicle manufacturer in the world and plans to transform the future of transport by the end of this decade by expanding product range from sports and passenger cars to pick-up trucks, heavy-duty trucks and public transport. Since the transport industry is a major source of carbon emissions, governments around the world are devising policies to encourage the adoption of EVs. Tesla, Inc. (NASDAQ: TSLA), owned by billionaire Elon Musk, has a lot of room to run in this regard.
Even though there are several reasons to be optimistic about the future outlook for the transport industry, there are lingering uncertainties that might play a small but crucial part in the final earnings for the transport sector for this fiscal year. A new administration in the White House has already pledged to increase spending on roads and airports, directly benefiting transport owners. But civil unrest, COVID-19 third waves, and the digitization of the economy are still potential roadblocks for the growth of transport stocks this year.
Digitization has affected several other sectors of the economy as well. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Connor Wang on Unsplash
With this context in mind, here is our list of 10 transportation as a service stocks to buy.
Best Transportation as a Service Stocks to Buy
10. Matson, Inc. (NYSE: MATX)
Number of Hedge Fund Holders: 14
Matson, Inc. (NYSE: MATX) is a Honolulu-based transportation company that primarily deals in ocean shipping services. It was founded in 1882 and is placed tenth on our list of 10 transportation as a service stocks to buy. The company has operations in the Pacific, Hawaii, Alaska, Guam, Micronesia, the South Pacific, China and Japan. Matson stock has returned almost 145% to investors over the past twelve months. The company has a market cap of more than $2.8 billion and posted more than $2.4 billion in annual revenue in 2020.
On April 27, Matson, Inc. (NYSE: MATX) reported $711 million in revenue for the first quarter of 2021, up close to 39% compared to the same period last year, and beating market estimates by over $36 million.
At the end of the fourth quarter of 2020, 14 hedge funds in the database of Insider Monkey held stakes worth $13 million in the firm, up from 9 the preceding quarter worth $12 million.
9. Echo Global Logistics, Inc. (NASDAQ: ECHO)
Number of Hedge Fund Holders: 15
Echo Global Logistics, Inc. (NASDAQ: ECHO) is a Chicago-based company that provides technology-based transportation and supply management services. It was founded in 2005 and is ranked ninth on our list of 10 transportation as a service stocks to buy. It serves many industries, including manufacturing, construction, food and beverage, consumer products, and retail. Echo Global stock has returned more than 117% to investors over the past twelve months. The share price of the firm has been soaring in the past weeks as economic activities gather steam.
On April 28, Echo Global Logistics, Inc. (NASDAQ: ECHO) posted more than $800 million in revenue for the first quarter of 2021, beating market estimates by more than $71 million. The first quarter revenue was up more than 45% compared to the same period last year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in the firm with 332,000 shares worth more than $8 million.
8. Expeditors International of Washington, Inc. (NASDAQ: EXPD)
Number of Hedge Fund Holders: 25
Expeditors International of Washington, Inc. (NASDAQ: EXPD) is a Washington-based logistics and freight forwarding company that was founded in 1979. It is ranked eighth on our list of 10 transportation as a service stocks to buy. The company has operations in the Americas, North and South Asia, Europe, and Africa. Expeditors stock has returned more than 52% to investors over the last twelve months through the company’s airfreight, ocean freight, intra-continental ground transportation, and warehousing services.
On May 4, Expeditors International of Washington, Inc. (NASDAQ: EXPD) reported more than $3.36 billion in quarterly revenue for the first three months of 2021. The number beat market estimates by close to $640 million and was up more than 76% compared to the same period last year.
At the end of the fourth quarter of 2020, 25 hedge funds in the database of Insider Monkey held stakes worth $477 million in the firm, down from 31 in the preceding quarter worth $528 million.
7. Virgin Galactic Holdings, Inc. (NYSE: SPCE)
Number of Hedge Fund Holders: 23
Virgin Galactic Holdings, Inc. (NYSE: SPCE) is a California-based spaceflight company founded in 2004. It is placed seventh on our list of 10 transportation as a service stocks to buy. The firm is developing spacecraft to market flights for tourists. The company is backed by billionaire Richard Branson and went public in 2019 and fetched a market valuation of $2 billion. It has increased in value since then and now has a market cap of close to $5 billion. The company posted close to $4 million in revenue in 2019.
On May 4, Virgin Galactic Holdings, Inc. (NYSE: SPCE) share price rose by over 4% as rival Blue Origin, owned by billionaire Jeff Bezos, announced that it would be auctioning seats for the first space tourism flight in the world. SPCE gained because Blue Origin’s ticket price is much higher than Virgin’s.
Like Uber Technologies, Inc. (NYSE: UBER), United Parcel Service, Inc. (NYSE: UPS), Tesla, Inc. (NASDAQ: TSLA) and FedEx Corporation (NYSE: FDX), SPCE is one of the best stocks to buy for long-term gains given the company’s ambitious plans.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in the firm with 2.7 million shares worth more than $65 million.
6. GATX Corporation (NYSE: GATX)
Number of Hedge Fund Holders: 12
GATX Corporation (NYSE: GATX) is a Chicago-based railcar leasing company. It was founded in 1898 and is ranked sixth on our list of 10 transportation as a service stocks to buy. GATX stock has returned more than 69% to investors over the past twelve months. The company has a market cap of more than $3.5 billion and posted more than $1.2 billion in annual revenue in 2020 despite the pandemic affecting operations. The firm also has stakes in the aircraft spare engine leases in partnership with Rolls Royce.
On April 28, GATX Corporation (NYSE: GATX) commented on the increase in steel prices and warned that the rising inflation was resulting in an increase in the cost of a car across the board. The firm also posted quarterly results for the first three months of 2021 earlier in April, reporting net income of more than $36 million.
At the end of the fourth quarter of 2020, 12 hedge funds in the database of Insider Monkey held stakes worth $177 million in the firm, up from 10 in the previous quarter worth $144 million.
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Disclosure: None. 10 Transportation as a Service Stocks to Buy is originally published on Insider Monkey.
