In this article, we discuss the 7 cheap transportation stocks to buy according to analysts along with the industry’s outlook.
The 33rd Annual Study of Logistics and Transportation Trends was posted on Supply Chain Management Review (SCMR) on September 12. It highlighted the growing challenges facing the logistics and transportation industry as market conditions, regulations, and technological advancements evolve.
The study surveyed over 200 industry professionals, of which 85% had 15+ years of experience and 80% held senior positions. The report provides insight into spending trends, strategies, performance, and regulatory impacts.
The study noted a significant decline in private fleet spending, down to 7.23%, while intermodal transport spending reached a decade-high of 6.5%. Larger shippers (sales over $3 billion) generally align with these trends but spend less on small package and less-than-truckload (LTL) services.
All performance metrics tracked in the study saw declines from 2023, with profitability, return on assets, competitive positioning, and revenue growth all down. Customer satisfaction remained high but showed signs of strain.
Talent shortages were a critical issue, especially in mid-level management and low-wage positions. Companies struggle to offer training due to a lack of time and knowledgeable trainers, with only 39% having formal learning programs. While logistics jobs offer stability and growth opportunities, they are perceived to lag in flexibility and benefits.
Growth Despite Challenges
According to Benchmark International, the global freight and logistics market is projected to grow to $18.69 billion by 2026, with a 4.4% annual growth rate. The logistics segment alone is expected to reach $6.55 trillion by 2027, growing at 4.7% per year. The market includes services like transportation, warehousing, consultation, and packaging across several industries such as manufacturing, agriculture, and construction. Asia-Pacific leads the market share, while North America is expected to grow the fastest by 2027.
Some of the most significant drivers of growth include trade agreements, technological advancements, and globalization. Innovations such as AI, blockchain, and GPS have streamlined logistics operations. The surge in e-commerce and online shopping has also fueled demand for efficient delivery systems, especially “last-mile” services, which represent the costliest part of shipping. The rise of the gig economy, where local couriers fulfill deliveries, has helped reduce these costs.
Sustainability is becoming a focus in logistics, with green initiatives offering fuel savings and appealing to eco-conscious consumers. Furthermore, mergers and acquisitions in the trucking and maritime sectors are expected to increase in 2024, which are driven by lower interest rates and advancements in fleet management technologies.
With that, we look at the 7 Cheap Transportation Stocks to Buy According to Analysts.
7 Cheap Transportation Stocks to Buy According to Analysts
Our Methodology
For this article, we used transportation ETFs to identify nearly 40 stocks. Next, we narrowed our list to 7 stocks with the lowest PE ratios and highest average analyst price target, as of September 20. The PE ratio of all the stocks in our list is lower than 20.
We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Cheap Transportation Stocks to Buy According to Analysts
7. Matson, Inc. (NYSE:MATX)
Average Analyst Price Target Upside as of September 20: 9.12%
PE Ratio (FWD) as of September 20: 11.97
Number of Hedge Fund Holders: 27
One of the cheap transportation stocks, Matson, Inc. (NYSE:MATX) has been an important player in the ocean transportation and logistics sector since its founding in 1882. The company operates through two main segments, Ocean Transportation and Logistics.
Its Ocean Transportation segment specializes in freight services for domestic markets such as Hawaii, Japan, Alaska, and Guam, as well as various island economies in Micronesia. The segment handles a diverse range of cargo, including dry and refrigerated goods, beverages, and other commodities, ensuring reliable delivery to these regions.
In addition to ocean freight, its Logistics segment provides comprehensive services that include transportation brokerage, less-than-container load consolidation, and freight forwarding. This division also offers warehousing, distribution, and supply chain management services, allowing the company to cater to a wide range of customer needs and enhance operational efficiency.
With a consensus Buy rating by 3 analysts, Matson’s (NYSE:MATX) average price target of $147.00 has an upside of 9.12% to the stock’s present level, as of September 20.
In the second quarter, the company showed strong financial performance, reporting EPS of $3.31, up from $2.26 in the same quarter the previous year. Net income also saw a significant increase, reaching $113.2 million compared to $80.8 million in Q2 2023. The strong performance was seen in both segments, which points to the effectiveness of its operational strategies.
Matson (NYSE:MATX) took proactive steps to return value to shareholders as it repurchased approximately 0.6 million shares during the second quarter. It is in a strong position, with cash and cash equivalents rising by $34.2 million from the end of 2023 to $168.2 million, as of June 30, 2024.
Furthermore, total debt decreased by $19.9 million over the first half of the year, leaving it at $420.7 million, with the majority classified as long-term debt. The reduction in debt is a positive sign of the company’s commitment to maintaining a healthy balance sheet.
The company expects that its Ocean Transportation operating income for the third quarter of 2024 will be significantly higher than the $118.2 million achieved in the same period last year. The company also expects moderate growth in operating income for the fourth quarter compared to the $66.4 million reported in Q4 2023. The forecasts indicate a strong outlook as the company continues to execute its plans effectively.
According to Insider Monkey’s database, 27 hedge funds held stakes in Matson (NYSE:MATX) in the second quarter, with positions worth $230.763 million. With 362,452 shares of the company, valued at $6.147 million, Citadel Investment Group is the largest shareholder of the company, as of June 30.
The London Company stated the following regarding Matson, Inc. (NYSE:MATX) in its Q2 2024 investor letter:
“Matson, Inc. (NYSE:MATX) – MATX ocean freight services are benefiting from rising shipping rates and improving market conditions. Global ocean freight pricing has been driven up by the ongoing disruption in the Red Sea, coupled with ramping peak season demand and healthier trade volumes. MATX’s success since the onset of the pandemic has led to permanent volume additions in the China trade lane, a transformed balance sheet. and significant share count reduction. MATX remains strategically positioned as a US Jones Act shipping operator and its expedited freight service continues to offer an attractive value proposition for its customers.”
6. CSX Corporation (NASDAQ:CSX)
Average Analyst Price Target Upside as of September 20: 14.51%
PE Ratio (FWD) as of September 20: 18.08
Number of Hedge Fund Holders: 65
CSX Corporation (NASDAQ:CSX) is engaged in rail-based freight transportation and provides a wide range of services that are crucial to various industries. The company’s offerings include the transportation of intermodal containers, trailers, and bulk commodities, along with specialized services for chemicals, agricultural products, and minerals. With a network of about 30 terminals, the company efficiently moves manufactured consumer goods while also facilitating rail-to-truck transfers.
The company has an extensive rail network spanning approximately 20,000 route miles, which connects major population centers across 26 states east of the Mississippi River, the District of Columbia, and parts of Canada.
The network integrates with over 240 short-line railroads and more than 70 ports, allowing the company to effectively reach both urban markets and rural areas. Such connectivity positions it as a critical player in the transportation sector.
In its second quarter, CSX (NASDAQ:CSX) reported operating income of $1.45 billion, with net earnings reaching $963 million. The company experienced a 2% increase in total volume, totaling 1.58 million units compared to the same quarter in 2023. Management is optimistic about achieving year-over-year margin growth throughout the remainder of the year, as the company continues to adapt to changing market conditions.
Analysts have taken notice of CSX’s (NASDAQ:CSX) potential. As per the coverage of 27 analysts, the stock has a consensus Buy rating. As of September 20, the average price target of $40 implies an upside of 14.51% from the present levels. It takes its place on our list of cheap transportation stocks to buy according to analysts.
On August 19, Argus analyst John Eade recommended that investors view recent share price fluctuations as an opportunity to buy. He points out that the rail industry is on a long-term growth trajectory compared to other transportation modes, making the company an attractive investment.
Furthermore, Eade highlighted the company’s consistent history of dividend increases and share buybacks. The analyst maintained a Buy rating and a price target of $39 on the stock.
5. SkyWest, Inc. (NASDAQ:SKYW)
Average Analyst Price Target Upside as of September 20: 19.06%
PE Ratio (FWD) as of September 20: 11.88
Number of Hedge Fund Holders: 28
SkyWest, Inc. (NASDAQ:SKYW) operates as a regional airline in the U.S., managing a diverse portfolio that includes SkyWest Airlines, SkyWest Charter, and SkyWest Leasing. With a fleet of around 500 aircraft, it connects travelers to more than 240 destinations across North America. The airline has established partnerships with major carriers such as United Airlines, Delta Air Lines, American Airlines, and Alaska Airlines, which enables it to serve over 38 million passengers in 2023 alone.
In addition to its scheduled passenger services, the company offers charter options through its SkyWest Charter division, which provides flexible travel solutions for businesses and groups that require tailored flight schedules. Additionally, the company leases aircraft to other operators through SkyWest Leasing, which enhances its revenue potential.
SkyWest (NASDAQ:SKYW) was held by 28 hedge funds in the second quarter and the stakes amounted to $196.217 million. SW Investment Management is the most dominant shareholder of the company and has a position worth $49.242 million as of Q2.
It is one of the cheap transportation stocks to buy according to analysts on our list. The stock has a consensus Buy rating among 4 analysts, and its average price target of $97.50 represents an upside of 19.06% from current levels. Moreover, analysts expect a massive growth of nearly 800% in the company’s EPS growth in 2024.
In the second quarter, the company reported a GAAP EPS of $1.82, which topped expectations by $0.09. Revenue of $867 million jumped 19.4% year-over-year and surpassed estimates by $40.4 million.
Since the start of 2023, SkyWest (NASDAQ:SKYW) has repurchased approximately 10.9 million shares, representing about 21.5% of its outstanding shares, at a total cost of $311 million and an average price of $28.54 per share. It shows that the company is committed to returning value to shareholders. Furthermore, it reduced its debt to $2.8 billion by the end of the second quarter, down from $3 billion at the end of 2023, with plans to pay off over $400 million in debt in 2024.
The company has also made significant strides in modernizing its fleet to boost operational efficiency and improve passenger comfort. By focusing on acquiring newer aircraft with advanced technology and fuel-efficient engines, it is positioning itself for sustainable growth. In Q2 alone, the company received eight of the 20 United Finance E175 aircraft, adding to its ongoing fleet expansion, with 19 more new aircraft set to arrive at the end of the year.
SkyWest (NASDAQ:SKYW) expects to increase its pilot workforce to over 5,000 by year-end, up approximately 1,000 pilots from the end of 2023. The growth in personnel, combined with a favorable captain balance, is expected to lead to a 9% to 11% increase in block hour production during the second half of the year.
4. FedEx Corporation (NYSE:FDX)
Average Analyst Price Target Upside as of September 20: 24.69%
PE Ratio (FWD) as of September 20: 12.82
Number of Hedge Fund Holders: 59
FedEx Corporation (NYSE:FDX) has built a remarkable legacy since its inception in 1973, evolving into a global leader in transportation and logistics. With services reaching over 220 countries and territories, it offers a diverse range of solutions, including overnight shipping, freight transportation, and comprehensive logistics services.
FedEx Express has maintained its position as the industry leader in express transportation, thanks to its innovative approach to logistics. It provides worldwide customers with overnight delivery services and international shipping solutions.
FedEx Freight stands out as a key provider of less-than-truckload (LTL) freight services across North America, catering to both businesses and residential customers. Additionally, FedEx Logistics enhances its offerings with a suite of integrated solutions, including air and ocean cargo transportation, customs brokerage, and supply chain management.
In its fiscal 2025 first quarter, the company reported earnings of $3.60 per share on revenue of $21.6 billion, which fell short of analysts’ expectations. While this may raise concerns, it is important to recognize the company’s ongoing initiatives aimed at improving efficiency and reducing costs.
Recently, the company has prioritized consolidation efforts through its “One FedEx” initiative, which merged FedEx Ground and FedEx Services into Federal Express to streamline operations and enhance overall effectiveness. This was complemented by the rollout of Network 2.0, designed to optimize surface operations across the U.S. and Canada.
The company is also embracing technology with initiatives like the DRIVE program, which focuses on data-driven decision-making and cost reduction. The goal is to achieve $4 billion in structural cost savings by the end of the fiscal year.
While current demand has faced challenges due to a slowing economy, some analysts remain optimistic about FedEx’s (NYSE:FDX) future. On September 20, Raymond James analyst Patrick Tyler Brown cut his price target to $310 a share from $330 but maintained a Buy rating. He acknowledged the weak demand and commented that he believes that the cost savings initiatives will eventually pay off.
Baird analyst Garrett Holland echoed this sentiment, describing the recent quarter as difficult but still maintaining a Buy rating. He noted that management’s capability to raise prices could further support profitability despite current demand pressures.
FedEx (NYSE:FDX) has a consensus Buy rating by 30 analysts. The average price target of $317.50 represents an upside of 24.69% to the stock’s last price, as of September 20. It ranks 4th on our list of cheap transportation stocks to buy according to analysts.
Longleaf Partners Fund stated the following regarding FedEx Corporation (NYSE:FDX) in its Q2 2024 investor letter:
“FedEx Corporation (NYSE:FDX) – Global logistics company FedEx was the top contributor for the quarter. Late in the quarter, FedEx reported strong fiscal year results, highlighting a year of strong cost management in a challenging revenue environment. Earnings per share (EPS) increased by 19%, and reduced capital expenditures narrowed the gap between EPS and FCF per share. With the increase in FCF, the company has become a significant share repurchaser, which is a welcome change. The company also announced a strategic review of their Freight segment. Our appraisal has long accounted for the underappreciated value in FedEx’s less-than-truckload operations. A potential spin-off or sale could unlock substantial value, as comparable companies like Old Dominion trade at significantly higher multiples on revenue, cash flow, and earnings than those applied to FedEx Freight by the market and our appraisal today.”
3. United Airlines Holdings, Inc. (NASDAQ:UAL)
Average Analyst Price Target Upside as of September 20: 33.22%
PE Ratio (FWD) as of September 20: 5.41
Number of Hedge Fund Holders: 56
United Airlines Holdings, Inc. (NASDAQ:UAL) plays a vital role in global air transportation, offering extensive services across North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America.
With a comprehensive mainline and regional fleet, it not only transports passengers but also moves cargo. Additionally, the airline provides catering, ground handling, flight training, and maintenance services to third-party clients, further diversifying its revenue streams.
In 2023, the company expanded its operational footprint, serving nearly all destinations worldwide, including 213 domestic and 135 international locations. With nearly 4,865 daily departures, the airline transported over 160 million customers throughout the year, which is evidence of its strong market presence and commitment to meet travel demand.
United Airlines (NASDAQ:UAL) has overwhelming Buy ratings from analysts. As of September 20, the average price target of $69.50 has an upside of 33.22% from the current levels. It ranks 3rd on our list of cheap transportation stocks to buy according to analysts.
In the second quarter, CEO Scott Kirby highlighted the company’s success in attracting a diverse customer base, which includes premium travelers, Basic Economy customers, and frequent domestic flyers. He mentioned that the broad appeal, combined with a strong loyalty program and a commitment to customer service, has enabled the airline to achieve margins that rank among the highest in the industry.
In a record-setting quarter, United Airlines (NASDAQ:UAL) carried 44.4 million passengers, making it the highest number of customers transported in the company’s history for that period. The airline also achieved a daily record, accommodating 565,000 passengers in a single day. Operating nearly 2,700 daily flights, it executed the largest schedule in its history for the second quarter, offering the most extensive domestic services in the U.S. and Canada. Its international schedule was 35% larger than that of the next largest U.S. competitor in terms of available seat miles, which further shows the company’s significant market position.
In Q2, 56 hedge funds had investments in United Airlines (NASDAQ:UAL), with positions worth $1.468 billion. PAR Capital Management is the top investor in the company and has a position worth $221.843 million, as of June 30.
2. GXO Logistics, Inc. (NYSE:GXO)
Average Analyst Price Target Upside as of September 20: 35.90%
PE Ratio (FWD) as of September 20: 18.54
Number of Hedge Fund Holders: 29
GXO Logistics, Inc. (NYSE:GXO) has positioned itself as a major player in the global logistics sector, which offers a range of services that include warehousing, distribution, order fulfillment, e-commerce solutions, and reverse logistics. It is among cheap transportation stocks to buy according to analysts.
Since its establishment as a spin-off from XPO Logistics in August 2021, the company has emerged as the largest pure-play contract logistics company in the world. This not only allows it to focus on its core logistics operations but also provides a pathway for growth through acquisitions in a vast and fragmented industry.
One of the company’s key strengths lies in its advanced technology integration. Currently, over 30% of its warehouses are equipped with cutting-edge technology, which improves efficiency and service quality.
With approximately 970 facilities covering nearly 200 million square feet globally, the company operates on behalf of companies that prefer to outsource their logistics functions. It identifies several key growth trends shaping the logistics landscape. It sees an increasing trend toward outsourcing as businesses concentrate on their core operations. The rise of e-commerce which demands expanded warehousing solutions is another growth area. Lastly, the growing emphasis on supply chain resilience in response to shifting global trade patterns is another growth trend that it focuses on.
In the second quarter, GXO Logistics (NYSE:GXO) reported a remarkable 19% increase in revenue. It was largely fueled by the acquisition of Wincanton, which significantly expanded its presence in the U.K. and enhanced its capabilities in critical sectors like aerospace and defense. The acquisition added more than 200 facilities to the company’s portfolio, further strengthening its operational footprint.
In the same quarter, the company secured $270 million in new business wins in annualized revenue, which shows a strong demand for its services. Furthermore, it is exploring the future of logistics through innovative technologies. For instance, it has introduced a humanoid robot in its warehouses as part of a pilot program in collaboration with Apptronik. The robot is capable of carrying 55 pounds and performing tasks like picking and packing.
In September, GXO Logistics (NYSE:GXO) took another step forward by announcing an agreement with Reflex Robotics to pilot its humanoid solutions for live operations. This second Robots-as-a-Service (RaaS) agreement showcases the company’s ambition to improve efficiency and productivity through cutting-edge robotics that can quickly adapt and learn from human interactions.
15 analysts have covered GXO Logistics (NYSE:GXO) and given it a consensus Buy rating. The average price target of $70.00 implies an upside of 35.90% to the stock’s last price, as of September 20.
Mar Vista Investment Partners, LLC stated the following regarding GXO Logistics, Inc. (NYSE:GXO) in its first quarter 2024 investor letter:
“GXO Logistics, Inc. (NYSE:GXO) experienced a setback this quarter. Customer volumes dropped 9%, stalling any organic growth. This slump was primarily driven by weakness in the omnichannel retail and consumer packaging sectors. As a result, the company’s 2024 forecasts fell short of analyst expectations, leading to a drop in share price after the announcement.
Despite cyclical headwinds, there are signs of a turnaround for GXO. Management indicated that customer volumes in January have already begun to improve. Additionally, they expect easier comparisons in the later half of 2024 to further aid recovery. To us, this suggests that the first half of 2024 may be the cyclical low point, with a rebound on the horizon. Over the next few quarters, GXO should get back on track towards achieving its long-term financial goals.”
1. Genco Shipping & Trading Limited (NYSE:GNK)
Average Analyst Price Target Upside as of September 20: 50.25%
PE Ratio (FWD) as of September 20: 9.31
Number of Hedge Fund Holders: 21
Genco Shipping & Trading Limited (NYSE:GNK) operates in the essential sector of global shipping, with a focus on the transportation of dry bulk commodities such as iron ore, grains, coal, and steel products.
With a fleet expected to comprise 41 vessels, including 15 Capesize, 15 Ultramax, and 11 Supramax carriers, it has a total capacity of around 4.3 million deadweight tons (dwt). The average age of its vessels is approximately 11.9 years, which is a sign of a balance between operational experience and the potential for modernization through strategic upgrades.
The company’s diverse fleet allows it to adapt to various shipping requirements. Capesize vessels are particularly efficient for large shipments over long distances, while the Ultramax and Supramax types offer versatility for smaller cargoes. This flexibility is important in a fluctuating market, which allows the company to meet client demands efficiently.
Genco Shipping (NYSE:GNK) has a consensus Buy rating from 8 analysts. As of September 20, the average price target of $27.00 represents an upside of 50.25%. It tops our list of cheap transportation stocks to buy according to analysts.
In the second quarter, the company reported non-GAAP EPS of $0.46, which slightly surpassed market expectations. Revenue climbed to $107.04 million, an 18.2% increase year-over-year, and exceeded estimates by $32.27 million.
CEO John C. Wobensmith highlighted the success of the fleet renewal program, which focuses on selling older vessels at favorable prices and reinvesting in more advanced ships to improve operational effectiveness and profit potential.
The company’s approach to value generation is anchored in three main strategies: returning cash to shareholders through generous quarterly dividends, reducing debt to maintain a healthy financial position, and pursuing asset growth and modernization. Over the past three years, it has paid out 20 consecutive quarterly dividends, returning nearly $5.92 per share, which represents about 35% of its share price as of early September 2024.
Additionally, Genco Shipping (NYSE:GNK) has significantly reduced its debt burden, with a nearly 80% decrease since 2021. The shift has lowered the company’s net loan-to-value ratio and cash flow breakeven point to some of the best levels in the industry.
The sales of older, less efficient vessels further show the company’s focus on its strategy. It recently sold two Capesize vessels, Genco Maximus and Genco Claudius, and has transactions lined up for Genco Warrior and Genco Hadrian. The sales not only brought in significant cash but also allowed the company to avoid $5.0 million in drydocking expenses next year, which improves overall profitability.
Management believes these decisions were well-timed, taking advantage of favorable market conditions to sell non-core assets while enhancing the fleet’s efficiency. As the company continues to modernize its fleet and improve its financial health, the outlook appears promising for both operational success and shareholder returns.
In Q2, 21 hedge funds held stakes in Genco Shipping (NYSE:GNK), with positions worth $81.3 million. As of the second quarter, Renaissance Technologies is the most significant shareholder in the company. The firm has increased its stake in the company by 67% to 1.05 million shares worth $22.376 million.
While we acknowledge the potential of Genco Shipping & Trading Limited (NYSE:GNK) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is promising and trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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