Back to top

Investment Ideas

The number one question I get asked these days is "Tracey, what are the hottest stocks?"

Most people expect to hear the names of some of the most popular companies like Facebook or Apple. But "popular" doesn't always mean "hot."

With the stock market rallying yet again in 2014, the easy money has been made on the popular names.

If you want a "hot" name, it's likely a company you've never heard of and that your friends aren't invested in.

Hot Stocks are Found in Hot Industries

If the hot stocks aren't the commonly known names, how do you go about finding them? Start with the hot sectors.

Most of us know what has been hot this year. It's been utilities, energy and the transports.

But there are niches within these hot sectors that offer even more promise.

One of the hottest industries has been the Equipment & Leasing segment of the transports. This includes the railcar and barge manufacturers, the railcar, truck and airplane leasing companies, and those handling transportation logistics.

It ranks 24 out of 265 Zacks Industries which is in the Top 9% of Zacks Ranked Industries.

3 of the Hottest Stocks Right Now

Two of these hot stocks are rail car makers and one handles transportation logistics. All of them are either Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) stocks.

Not only do they have momentum, but the fundamentals are fabulous.

These are three companies you should be adding to your investing short list.

1. The Greenbrier Companies, Inc.
2. Trinity Industries Inc.
3. Ryder System, Inc.

1. The Greenbrier Companies (GBX - Snapshot Report)

Greenbrier manufactures railcars and ocean barges and also provides leasing services. On July 2, Greenbrier reported fiscal third quarter results and blew by the Zacks Consensus by 29 cents. Backlog is up 74% which provides strong earnings clarity going forward.

Shares are at record highs but the earnings growth is there.

Expected earnings growth for F2014: 53%
Expected earnings growth for F2015: 30%
Forward P/E = 21
Zacks Rank #1 (Strong Buy)

Shares have been on a tear in the last 6 months compared to the S&P 500 with Greenbrier shares jumping 90.5% versus the 8.7% gain for the S&P 500.

Now THAT is hot.

2. Trinity Industries (TRN - Snapshot Report)

Trinity Industries operates a diverse group of businesses including making and leasing railcars, the production of tubular steel structures for electricity transmission, the manufacturing of inland barges, and construction of highway products such as guard rails.

It has put together a nice earnings surprise track record, having beaten the Zacks Consensus Estimate the last 10 quarters. Trinity will report earnings again on July 29.

Expected earnings growth for 2014: 61%
Expected earnings growth for 2015: - 4.8%
Forward P/E = 11.8
Zacks Rank #2 (Buy)

Shares have soared all year gaining 62.2% the last 6 months compared to the 8.7% return of the S&P 500.

3. Ryder System (R - Analyst Report)

When people think of Ryder, they often think of rental trucks for personal moving. But Ryder is a big supplier of commercial transportation and logistics. Yes, it leases trucks but it also provides logistics through the entire manufacturing chain as well as routing and scheduling assistance.

Ryder has an excellent earnings surprise record. It hasn't missed on the Zacks Consensus Estimate since 2010.

Expected earnings growth for 2014: 12.7%
Expected earnings growth for 2015: 15.5%
Forward P/E = 15.9
Zacks Rank #2 (Buy)

Shares have also been hot in 2014, gaining 23.9% over the last 6 months versus the 8.7% return of the S&P 500. Not too shabby for a company that's been around 80 years.

[The author of this article owns shares of TRN.]

Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Please login to Zacks.com or register to post a comment.