5 Best Transportation Stocks To Buy Heading Into 2024

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.”

4. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 57

The Boeing Company (NYSE:BA) engages in the design, development, manufacturing, and servicing of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and related services on a global scale. The company is divided into four segments – Commercial Airplanes, Defense, Space & Security, Global Services, and Boeing Capital. The Boeing Company (NYSE:BA) is one of the top transportation stocks to invest in. 

On November 1, Goldman Sachs added The Boeing Company (NYSE:BA) to its Conviction Buy list. According to Noah Poponak, an analyst at Goldman Sachs, investors appear to be giving more attention to short-term disruptions rather than long-term fundamentals and normalized free cash flow, which he sees as a buying opportunity. The analyst maintained a $258 price target on Boeing. 

According to Insider Monkey’s second quarter database, 57 hedge funds were bullish on The Boeing Company (NYSE:BA), compared to 52 funds in the prior quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent stakeholder of the company, with 2 million shares worth $438.6 million. 

Meridian Funds made the following comment about The Boeing Company (NYSE:BA) in its Q3 2022 investor letter:

“We similarly remained invested in largely out-of-favor The Boeing Company (NYSE:BA) , a global leader in developing and producing commercial jet aircraft. Due to some self-inflicted wounds and a bit of bad luck, as well as dramatic declines in air travel early in the pandemic, investor sentiment for this company has simply been awful. As part of our contrarian thinking, however, we view the business as critical to global transportation needs and see multiple catalysts to improve sentiment. In addition to the current surge in air travel worldwide, ramped up production of the 737 MAX aircraft and the pending restart of 787 Dreamliner deliveries should help turn broader sentiment. Additionally, we anticipate a meaningful inflection in cash flow as Boeing starts delivering aircraft currently in storage as well as the eventual expansion of its production in both core platforms.”

3. CSX Corporation (NASDAQ:CSX)

Number of Hedge Fund Holders: 64

CSX Corporation (NASDAQ:CSX) provides rail-based freight transportation services, including intermodal container and trailer transportation, chemical, food, and mineral transport, as well as coal and iron ore shipping to different industries. On October 11, CSX Corporation (NASDAQ:CSX) declared a quarterly dividend of $0.11 per share, in line with previous. The dividend is distributable on December 15, to shareholders of record as of November 30. 

According to Insider Monkey’s second quarter database, 64 hedge funds were bullish on CSX Corporation (NASDAQ:CSX), compared to 61 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with 52.5 million shares worth $1.8 billion. 

Here is what ClearBridge Investments Global Infrastructure Value Strategy has to say about CSX Corporation (NYSE:CSX) in its Q4 2021 investor letter:

“On a regional basis, the U.S. and Canada were the top contributors to quarterly performance, of which U.S. rail operator CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beat market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”

2. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 84

Union Pacific Corporation (NYSE:UNP) is engaged in the railroad business in the United States. The company provides transportation services for grain, fertilizers, petroleum, construction products, chemicals, forest products, and metals. Union Pacific Corporation (NYSE:UNP) is one of the best transportation stocks to buy. On October 19, the company reported a Q3 GAAP EPS of $2.51, beating market estimates by $0.08. However, the revenue of $5.94 billion fell short of Street consensus by $40 million. 

According to Insider Monkey’s second quarter database, 84 hedge funds were long Union Pacific Corporation (NYSE:UNP), compared to 85 funds in the preceding quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the largest stakeholder of the company, with 8.26 million shares worth $1.7 billion. 

Cooper Investors made the following comment about Union Pacific Corporation (NYSE:UNP) in its Q3 2023 investor letter:

“The major focus in Texas was spending a day visiting operations of Union Pacific Corporation (NYSE:UNP), a Stalwart investment made earlier this year.

Our investigations into the railroad industry have felt like a history lesson of the late 19th Century, a peek into the Gilded Age. At this time railroads became a transformative force that connected the East Coast to the Western frontier, pushing the economic potential of US industry and commerce to new heights. Over a century later and despite technological upheaval, the freight railroads of North America still feel just as relevant and a key part of the new industrial age.

To own, operate and invest in a railroad is to be a part of the lifeblood of North America. It is to witness the movement of grain, concrete, steel, wood, energy, autos, and shipping containers across vast distances. These are irreplaceable assets that could not be built today, and for the most part have very few substitutes – UNPs tagline “Building America” certainly rings true…” (Click here to read the full text)

1. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 144

Uber Technologies, Inc. (NYSE:UBER) develops and operates technology applications for transportation services worldwide. It operates in three segments – Mobility, Delivery, and Freight. Uber Technologies, Inc. (NYSE:UBER) is one of the best transportation stocks to buy. On September 28, Uber’s CEO, Dara Khosrowshahi, announced a shift in focus towards profitability during a speech at the Skift Global Forum in New York. The company intends to prioritize cost management and expand its offerings by introducing travel products, aiming to grow its reach while keeping costs under control. This comes after Uber reported its first quarterly profit and $1.2 billion in free cash flow during June, marking a change from its earlier years of substantial losses.

According to Insider Monkey’s second quarter database, Uber Technologies, Inc. (NYSE:UBER) was part of 144 hedge fund portfolios, same as the prior quarter. Brad Gerstner’s Altimeter Capital Management is the largest stakeholder of the company, with 13.3 million shares worth $575.7 million. 

Aristotle Large Cap Growth Strategy made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:

“Uber Technologies, Inc. (NYSE:UBER) develops and operates proprietary technology applications. The company operates through three segments: Mobility, Delivery and Freight. The Company develops and operates proprietary technology applications supporting a variety of offerings on its platform.

We see the company as the global leader in ride-hailing and one of the few delivery app companies with a strong network effect for both businesses. Uber is experiencing strong revenue growth as adoption and frequency of usage continue to grow in both segments. We expect the company will also benefit from more demand due to the higher frequency of workers attending work in the office, rather than working from their homes. We look for revenue growth as the adoption of Uber’s services increases and the company expands globally.”

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