In this article, we discuss 5 best transportation stocks to buy for 2024. If you want to read our discussion on the transportation industry, head over to 11 Best Transportation Stocks To Buy Heading Into 2024.
5. Delta Air Lines, Inc. (NYSE:DAL)
Number of Hedge Fund Holders: 56
Delta Air Lines, Inc. (NYSE:DAL) offers passenger and cargo air transportation in the United States and internationally. The company operates with two segments, Airline and Refinery, with a strong domestic and international network. It is one of the best transportation stocks to buy. On October 12, Delta Air Lines, Inc. (NYSE:DAL) reported a Q3 non-GAAP EPS of $2.03 and a revenue of $15.49 billion, outperforming Wall Street estimates by $0.08 and $360 million, respectively.
According to Insider Monkey’s second quarter database, 56 hedge funds were long Delta Air Lines, Inc. (NYSE:DAL), same as the prior quarter. Thomas E. Claugus’ GMT Capital is the largest stakeholder of the company, with 6.3 million shares worth $301.5 million.
Patient Capital Management made the following comment about Delta Air Lines, Inc. (NYSE:DAL) in its Q3 2023 investor letter:
“Airlines returned to trough multiples as higher oil prices pressured costs. Historically, airlines have passed these costs on to customers. We think Delta Air Lines, Inc. (NYSE:DAL) is a premium brand valued like its economics aren’t sustainable. With mid-teens returns on capital, significant free cash flow generation, excellent capital allocation and long-term earnings per share growth in the high-single to low-double-digits, we think the company is significantly mispriced.
Delta Air Lines Inc. (DAL) reversed course in the third quarter, falling 24% from its highs in July. The airlines in general were hurt from rising commodity prices that are leading to increased cost per available seat mile (CASM). Historically, airlines have passed on higher fuel prices to customers with a lag. We see Delta as a premium global consumer brand that is materially misunderstood by the market. The market still sees airlines as a cyclical, bankruptcy prone industry. An improved supply-demand picture, management discipline and a better business mix make Delta a more resilient business. Their loyalty program with American Express is a source of stable and growing revenues with $6.5B in remunerations this year with a goal of reaching $10B by the end of the contract in 2028. Premium and ancillary service revenue should generate 65-70% of the total in the next year or two. The company should continue to generate consistent mid-teens returns on capital. As the market begins to understand, we believe the company will continue to be rewarded. On top of this, free cash flow is expected to expand generating a cumulative ~$11B from ’23-’25, or one-half of its current market cap. As the company pays down debt while growing the dividend and eventually resuming share repurchases, we think the stock will continue to trend higher.”
