The transportation and freight market is experiencing significant growth owing to the increasing reliance on e-commerce and global trade, advancements in technology, and supportive government initiatives, and the normalizing supply chains.
Given the industry tailwinds, it could be wise to invest in fundamentally sound transportation stocks FedEx Corporation (FDX), Westinghouse Air Brake Technologies Corporation (WAB), and ArcBest Corporation (ARCB) as supply chain prospers again.
Currently, in the U.S., the transportation market growth is influenced by robust private consumption, supporting the shipping of durable and non-durable consumer goods demand. Also, continuous government initiatives to improve infrastructure will likely promote greater supply chain efficiency and reduce costs benefiting the market.
Further, the market looks promising with the festival and holiday season ahead and anticipation of peak spending. Value added in the transportation market is expected to be $690 billion in 2024, and the volume of goods transported is projected to amount to 7.19 trillion TKM.
Further, with favorable factors like urbanization, a growing population, rising demand for online shopping through e-commerce platforms, and improving infrastructure and logistics, the global transportation industry market is expected to grow to $11.10 trillion by 2024, expanding at a CAGR of 5.4%.
Further, the United States freight and logistics market, one of the most developed logistics markets globally, is projected to grow from $1.33 trillion in 2024 to $1.67 trillion by 2030. The market is poised to register a CAGR of 3.9%, driven by strategic infrastructure investments and technological advancements.
Given the industry’s robust outlook, investing in quality transportation stocks such as FDX, WAB, and ARCB could be wise for future gains.
FedEx Corporation (FDX)
FDX provides transportation, e-commerce, and business services internationally. The company operates through FedEx Express; FedEx Ground; FedEx Freight; and FedEx Services segments. It offers express transportation, small-package ground delivery, freight transportation services, and time-critical transportation services.
On September 18, FDX launched fdx.com, which is available to FedEx customers in the U.S. It is a data-driven commerce platform with powerful FedEx network insights that connect the entire customer journey. The platform will help FDX’s customers to grow demand, increase conversion, optimize fulfillment, and streamline returns.
On September 5, FDX announced a strategic alliance and investment with Nimble, an AI robotics and autonomous e-commerce fulfillment technology company, in order to scale FedEx Fulfillment with their fully autonomous 3PL model. The strategic investment in Nimble will expand FDX’s e-commerce footprint and scale FedEx Fulfillment offerings across North America.
FDX reported a total revenue of $21.58 billion during the first quarter that ended August 31, 2024, and its adjusted operating income was $1.21 billion. The company’s net income and EPS amounted to $892 million and $3.60 for the quarter, respectively.
Furthermore, as of August 31, 2024, the company’s cash and cash equivalents and total assets stood at $5.94 billion and $86.71 billion, respectively.
Analysts expect FDX’s revenue for the second quarter (ending November 2024) to increase 1.9% year-over-year to $22.60 billion, and its EPS for the same quarter is expected to grow 13.1% year-over-year to $4.51. For the fiscal year (ending May 2025), the company’s revenue and EPS are expected to grow 2.4% and 17.6% year-over-year to $89.82 billion and $20.93, respectively.
Shares of FDX have surged 17.1% over the past six months and 20.2% over the past year to close the last trading session at $300.39.
FDX’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
FDX has a B grade for Growth and Quality. It is ranked #1 out of 16 Air Freight & Shipping Services industry stocks.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of FDX for Sentiment, Momentum, Stability, and Value. Get all FDX ratings here.
Westinghouse Air Brake Technologies Corporation (WAB)
WAB provides technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries globally. The company offers diesel-electric, battery, and liquid natural gas-powered locomotives, engines, electric motors, propulsion systems, and marine and mining products.
On July 30, WAB secured a $277 million order for Evolution Series ES43ACmi locomotives (Rio Tinto JV) to support the Simandou Iron Ore Project. The order will provide a locomotive fleet to service the rail operations for the Simandou high-grade iron ore project located east of Guinea.
On July 18, WAB's Board of Directors declared a regular quarterly common dividend of $0.20 per share, paid on August 28, 2024, to holders of record on August 14, 2024.
WAB’s annual dividend of $0.80 equates to a yield of 0.46% at the current share price. Its four-year average dividend yield is 0.58%. Also, the company’s dividend payouts have increased at a CAGR of 17.1% over the past three years.
During the second quarter that ended June 30, 2024, WAB’s net sales rose 9.8% year-over-year to $2.64 billion. Its adjusted gross profit increased 20.4% year-over-year to $880 million. The company’s adjusted income from operations of $510 million indicates growth of 29.1% from the prior year’s quarter.
Furthermore, the company’s adjusted net income and EPS came in at $348 million and $1.96, up 35.9% and 39% year-over-year, respectively.
Street expects WAB’s revenue and EPS for the third quarter (ending September 2024) to increase 5.2% and 11% year-over-year to $2.68 billion and $1.89, respectively. Furthermore, the company surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
Over the past six months, WAB’s stock has gained 25.4% and 64.9% over the past year to close the last trading session at $178.24.
WFRD’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Sentiment, and Quality. WAB has topped in the list of 16 stocks within the B-rated Railroads industry.
Click here to access additional ratings of WAB for Momentum, Stability and Value.
ArcBest Corporation (ARCB)
ARCB is an integrated logistics company engaged in ground, air, and ocean transportation solutions. It operates in two segments: Asset-Based; and Asset-Light. The company offers less-than-truckload services that transport general commodities, like food, textiles, apparel, furniture, appliances, chemicals, and non-bulk petroleum products.
On August 6, ARCB joined TriumphPay Network as a full audit and payments network participant. ARCB joined the network as part of TriumphPay’s strategy to serve carriers better, improve operational efficiency, and enhance payment security. The customer alliance will potentially result in expansion and growth for the companies in the freight industry.
On July 30, ARCB’s Board of Directors declared a quarterly cash dividend of $0.12 per share to holders of record of its common stock on August 13, 2024, paid on August 27, 2024.
ARCB pays an annual dividend of $0.48, which translates to a yield of 0.43% at the current share price. Its four-year average dividend yield is 0.49%. Moreover, the company’s dividend payouts have increased at a CAGR of 14.5% over the past three years.
For the second quarter that ended June 30, 2024, ARCB reported revenue of $1.08 billion, while its non-GAP operating income rose 28.1% from the year-ago value to $64.20 million. The company’s non-GAAP net income from continuing operations and EPS came in at $47.38 million and $1.98, up 24.8% and 28.6% year-over-year, respectively.
Furthermore, the company's adjusted EBITDA increased 24.3% from the year-ago value to $94.86 million.
Analysts expect ARCB’s EPS for the first quarter (ending March 2025) to increase 20.3% year-over-year to $1.61, and its revenue for the same period is expected to grow 4% year-over-year to $1.08 billion. Moreover, the company topped the consensus revenue estimates in each of the trailing four quarters.
ARCB’s stock has surged 7.1% over the past month and 16.1% over the past year to close the last trading session at $115.83.
ARCB’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ARCB has a B grade for Growth, Momentum, and Value. The stock is ranked first among the 17 stocks in the Trucking Freight industry.
To access ARCB’s other ratings, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
FDX shares were trading at $255.34 per share on Friday afternoon, down $45.05 (-15.00%). Year-to-date, FDX has gained 2.50%, versus a 20.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Transportation Stocks to Buy as Supply Chains Normalize StockNews.com
