5 Cheap Transportation Stocks To Buy

In this article, we discuss 5 cheap transportation stocks to invest in. If you want to read our detailed discussion on the transportation industry, head over to 11 Cheap Transportation Stocks To Buy. 

5. Norfolk Southern Corporation (NYSE:NSC)

Number of Hedge Fund Holders: 51

Trailing P/E Ratio: 17.96

Norfolk Southern Corporation (NYSE:NSC) is primarily engaged in rail transportation services in the United States. The company transports a wide range of goods, including agriculture and forest products, chemicals, metals, construction materials, automotive products, and coal. It is one of the cheap transportation stocks to buy. 

On May 22, Citi analyst Christian Wetherbee upgraded Norfolk Southern Corporation (NYSE:NSC) to Buy from Neutral. The analyst believes that the transportation sector in the US will experience a positive turning point, despite the presently low sentiment and valuations. Among railway companies, Norfolk Southern Corporation (NYSE:NSC) is considered to have the most potential for growth due to anticipated service improvements and a gradual reduction of concerns related to the train derailment in East Palestine, Ohio, which occurred earlier in 2023.

According to Insider Monkey’s first quarter database, 51 hedge funds were bullish on Norfolk Southern Corporation (NYSE:NSC), compared to 43 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 1.65 million shares worth approximately $352 million. 

The London Company Large Cap Strategy made the following comment about Norfolk Southern Corporation (NYSE:NSC) in its first quarter 2023 investor letter:

“Norfolk Southern Corporation (NYSE:NSC) – NSC was a significant underperformer this quarter reflecting weaker than expected quarterly earnings and news of a train derailment in Ohio. Fortunately, there were no fatalities related to the derailment, but there was environmental damage. Historically, the financial impact from train derailments have been relatively small and NSC’s insurance coverage could help cushion the blow. We believe NSC will emerge from this relatively unscathed, but will have to reinforce some of their network due to changes made from precision scheduled railroading efforts.”

4. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 85

Trailing P/E Ratio: 18.56

Union Pacific Corporation (NYSE:UNP) provides transportation services for a wide range of goods, including grains, fertilizers, food products, coal, petroleum, industrial chemicals, forest products, metals, automobiles, and intermodal containers. It is one of the top cheap transportation stocks to watch. On April 20, Union Pacific Corporation (NYSE:UNP) reported a GAAP EPS of $2.67, beating market consensus by $0.09. The revenue of $6.06 billion also outperformed Wall Street estimates by $19.81 million. 

According to Insider Monkey’s first quarter data, 85 hedge funds were bullish on Union Pacific Corporation (NYSE:UNP), compared to 83 funds in the prior quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading position holder in the company, with 8.26 million shares worth $1.6 billion. 

Matrix Asset Advisors made the following comment about Union Pacific Corporation (NYSE:UNP) in its Q1 2023 investor letter:

“During the quarter we added a new position in Union Pacific Corporation (NYSE:UNP). Union Pacific (UNP) is the 2nd largest railroad network in the United States just behind Burlington Northern Santa Fe. The firm operates in the Western, Midwestern, and Southern portions of the United States. 90% of UNP sales come from the US and 10% from Mexico. Over the past decade, railroads gained market share from the trucking industry because it costs 10-40% less to ship via rails than trucks. The company has a long history of consistent operating growth and profitability. The shares fell from a high of $278 in May of 2022 after the firm experienced operating challenges due to a slower macro environment and higher expenses.”

3. Canadian National Railway Company (NYSE:CNI)

Number of Hedge Fund Holders: 39

Trailing P/E Ratio: 19.50

Canadian National Railway Company (NYSE:CNI) primarily offers rail transportation services. The company provides a variety of rail services, intermodal services, and trucking services, including temperature controlled cargo, customs brokerage, and logistic parks. The company serves automotive, coal, fertilizers, forest products, grain, petroleum, and consumer goods industries across Canada and the United States. Canadian National Railway Company (NYSE:CNI) is one of the best cheap transportation stocks to invest in. 

On May 9, Canadian National Railway Company (NYSE:CNI) disclosed a public debt issuance consisting of C$550 million 4.15% notes due 2030, C$400 million 4.40% notes due 2033, and C$800 million 4.70% notes due 2053. The offering concluded on May 10, 2023. The funds raised will be utilized for general corporate expenses, including potential activities like redeeming and refinancing existing debts, share buybacks, acquisitions, and exploring other business opportunities.

According to Insider Monkey’s first quarter database, 39 hedge funds were bullish on Canadian National Railway Company (NYSE:CNI), compared to 41 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 54.8 million shares worth $6.4 billion. 

2. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)

Number of Hedge Fund Holders: 33

Trailing P/E Ratio: 20.79

J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) offers surface transportation, delivery, and logistic services within North America. The company is divided into five segments – Intermodal, Dedicated Contract Services, Integrated Capacity Solutions, Final Mile Services, and Truckload. According to Goldman Sachs, J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) stock has not performed as well as other companies in the light transportation sector this year. While the company’s shares have risen by 8% in 2023, Goldman analysts believe that “asset light names” like JBHT will likely outperform later in the cycle. Goldman Sachs set a price target of $202 for J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) and maintained a Buy rating on the stock on July 18. 

According to Insider Monkey’s first quarter database, 33 hedge funds were long J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), compared to 30 funds in the prior quarter. Henry Ellenbogen’s Durable Capital Partners is the largest stakeholder of the company, with 2 million shares worth $367 million. 

Wedgewood SMID Cap Strategy made the following comment about J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) in its Q1 2023 investor letter:

“As we continue to familiarize our clients with our SMID portfolio’s holdings, we would like to discuss our significant exposure to the U.S. Transportation industry. We currently have three transportation holdings and have been substantially overweight the industry in comparison to the Russell 2500 index for several years. While these undoubtedly are cyclical business models, we see many long-term tailwinds for the domestic Transportation industry, which will provide attractive growth levels and will allow these companies to improve their returns on investment over time.

J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is the country’s largest independent provider of intermodal transportation services, with smaller businesses in trucking and logistics. Intermodal transportation refers to freight deliveries that require the use of more than one “mode” of transportation, most often including some combination of ocean, railroad, and truck between source and destination. J.B. Hunt generally provides the rail portion of these intermodal loads.

J.B. Hunt benefited from the exacerbated shortage in Truckload capacity in both their intermodal business—where they could directly substitute railroad service for people who weren’t able to find TL capacity—and in their smaller, but rapidly growing Dedicated TL division, where the company takes over all or a portion of a shipping customer’s trucking fleet. While customers were paying significantly higher prices and still struggling to find any trucking capacity, they found it very attractive to contract for a dedicated, outsourced fleet with J.B. Hunt.”

1. ZTO Express (Cayman) Inc. (NYSE:ZTO)

Number of Hedge Fund Holders: 23

Trailing P/E Ratio: 21.19

ZTO Express (Cayman) Inc. (NYSE:ZTO) specializes in providing express delivery and value-added logistics services. The company’s services include freight forwarding and delivery solutions for both e-commerce and traditional merchants. On April 25, Goldman Sachs upgraded ZTO Express (Cayman) Inc. (NYSE:ZTO) from Neutral to Buy. Analyst Ronald Keung anticipates significant potential for the transport logistics stock, with more than a 50% upside, as competition in the industry eases. He predicts that the top two express players, including ZTO Express (Cayman) Inc. (NYSE:ZTO), will continue to gain market share due to their strong positioning in a competitive environment where service quality and growth are now the primary focus. It is one of the best cheap transportation stocks to watch. 

According to Insider Monkey’s first quarter database, ZTO Express (Cayman) Inc. (NYSE:ZTO) was part of 23 hedge fund portfolios, compared to 21 in the prior quarter. Kerr Neilson’s Platinum Asset Management is the largest stakeholder of the company, with a position worth $461 million.

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