12 Best Freight Stocks to Buy According to Hedge Funds

6. XPO, Inc. (NYSE:XPO)

Number of Hedge Fund Holders: 45

​​XPO, Inc. (NYSE:XPO) is a transportation company that follows a more specialized strategy. It primarily provides Less-Than-Truckload operations in North America but has some transportation activity in Europe as well. With over three decades of experience, XPO leverages its own proprietary technology, such as data science and machine learning algorithms, to optimize efficiency and enhance execution for its clients. Over time, the company has grown into one of the market leaders in the US, with more than 8% reported market share in LTL.

XPO, Inc. (NYSE:XPO) delivered strong results in the recent Q4 2024 with YoY earnings growth and LTL margin expansion that outperformed the industry. For the full year 2024, the company grew revenue by 4% to a record $8.1 billion, generated $1.3 billion of adjusted EBITDA, representing a 27% increase from the prior year, and delivered a 31% increase in adjusted diluted EPS. XPO successfully integrated 25 new service centers into their network, establishing a major competitive advantage in customer service capacity. The company improved operational efficiency significantly, reducing outsourced miles to historic lows and achieving a damage claims ratio of 0.2%, marking an improvement from 0.3% the previous year.

Looking ahead, XPO, Inc. (NYSE:XPO) expects to deliver significant margin expansion and earnings growth in 2025, with a baseline expectation of 150 basis points of margin improvement for the full year. The company currently maintains nearly 30% excess door capacity and a robust fleet in the trough of the cycle, positioning them strongly for accelerated operating leverage and profitable growth in the freight market up-cycle. With a lower Capex profile and sustained earnings growth expected, XPO anticipates generating higher levels of free cash flow, providing greater flexibility to return capital to shareholders over time. The strong guidance for the future and flawless execution from management make XPO one of the best freight stocks to invest in.