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Transportation Services Stocks Poised to Grow: 4 Top Picks
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The diversified transportation sector, which includes airline operators, railroads, truckers and shippers, to name a few, gained a foothold in in the last quarter of 2017 after struggling for most of the year. Strong U.S. macro-economic fundamentals, substantial surge in manufactured and retail goods along with improving global economic conditions is anticipated to fuel the transportation sector’s growth.
Consequently, companies offering equipment financing and leasing, logistics and supply chain management services to transporters have also rebounded in 2018. At this stage, investment in transportation services stocks with favorable Zacks Rank will be a prudent move.
Growth Inducing Polices
The overall economic outlook has been fairly bullish propelled by President Donald Trump’s proposed policy changes. The two pro-growth agendas of Trump, namely, significant cut in corporate tax and deregulation are major catalysts to the transportation sector.
The proposal to reduce corporate taxes from the current 35% to 21% is likely to bring corporate tax rate to its lowest level in 78 years. A large part of transporters book much of their revenues within the United States. Consequently, a significant reduction in corporate tax rate faced by these companies would be immediately accretive to cash flow.
Effect on Transportation Sector
The U.S. economy is in good health at the moment. On Mar 21, the Fed raised the economic outlook for 2018 from 2.5% to 2.7% and provided robust estimates of several key economic metrics post the Federal Open Market Committee’s latest policy meeting. A thriving and improving U.S. economy also supports the overall bullishness of the transport sector, as it implies that more goods are being transported across the United States.
Improved global growth prospects, sustained business and consumer confidence have in turn helped the transport sector recover from the sluggishness that plagued it in 2017 to quite an extent. Easily available credit also strengthens the situation. As a result, companies which offer equipment financing, leasing, logistics and supply chain management to transporters are also enjoying a bull run.
Zacks FavorsTransportation Services Industry
The Transportation Services industry is currently in a strong position from the Zacks Industry Rank perspective. The industry is currently in the top 14% (36 out of 256) of the Zacks categorized industries, suggesting it is well-positioned. Historically, the top 50% of the Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Our Top Picks
The U.S. economy is gathering steam. With the overall economy back on track, things are looking up for the transportation sector as well. This key sector (one of the top 16 Zacks sectors) is likely to end 2018 on a triumphant note. Consequently, growth potential of transportation services stocks make them lucrative.
The chart below shows price performance of our four picks in the last six months.
Schneider National Inc. (SNDR - Free Report) is a transportation and logistics services company. It provide portfolio of premier truckload, intermodal and logistics solutions.
Schneider National has expected earnings growth of 50% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 60 days.
XPO Logistics Inc. (XPO - Free Report) is a third-party logistics provider offering expedient, single-source solutions for time-critical and service-sensitive shipments through its non-asset based transportation network.
XPO Logistics has expected earnings growth of 75.9% for current year. The Zacks Consensus Estimate for the current year has improved by 10.6% over the last 60 days.
ZTO Express Inc. (ZTO - Free Report) is an express delivery company. It provides express delivery service through its nationwide network as well as other value-added logistics services.
ZTO Express has expected earnings growth of 24.3% for current year. The Zacks Consensus Estimate for the current year has improved by 8.8% over the last 60 days.
Textainer Group Holdings Ltd. is the world’s largest lessor of intermodal containers with a total fleet of more than 1.3 million containers, representing over 2,000,000 TEU.
Textainer Group has expected earnings growth of 241.5% for current year. The Zacks Consensus Estimate for the current year has improved by 7.7% over the last 60 days.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Transportation Services Stocks Poised to Grow: 4 Top Picks
The diversified transportation sector, which includes airline operators, railroads, truckers and shippers, to name a few, gained a foothold in in the last quarter of 2017 after struggling for most of the year. Strong U.S. macro-economic fundamentals, substantial surge in manufactured and retail goods along with improving global economic conditions is anticipated to fuel the transportation sector’s growth.
Consequently, companies offering equipment financing and leasing, logistics and supply chain management services to transporters have also rebounded in 2018. At this stage, investment in transportation services stocks with favorable Zacks Rank will be a prudent move.
Growth Inducing Polices
The overall economic outlook has been fairly bullish propelled by President Donald Trump’s proposed policy changes. The two pro-growth agendas of Trump, namely, significant cut in corporate tax and deregulation are major catalysts to the transportation sector.
The proposal to reduce corporate taxes from the current 35% to 21% is likely to bring corporate tax rate to its lowest level in 78 years. A large part of transporters book much of their revenues within the United States. Consequently, a significant reduction in corporate tax rate faced by these companies would be immediately accretive to cash flow.
Effect on Transportation Sector
The U.S. economy is in good health at the moment. On Mar 21, the Fed raised the economic outlook for 2018 from 2.5% to 2.7% and provided robust estimates of several key economic metrics post the Federal Open Market Committee’s latest policy meeting. A thriving and improving U.S. economy also supports the overall bullishness of the transport sector, as it implies that more goods are being transported across the United States.
Improved global growth prospects, sustained business and consumer confidence have in turn helped the transport sector recover from the sluggishness that plagued it in 2017 to quite an extent. Easily available credit also strengthens the situation. As a result, companies which offer equipment financing, leasing, logistics and supply chain management to transporters are also enjoying a bull run.
Zacks FavorsTransportation Services Industry
The Transportation Services industry is currently in a strong position from the Zacks Industry Rank perspective. The industry is currently in the top 14% (36 out of 256) of the Zacks categorized industries, suggesting it is well-positioned. Historically, the top 50% of the Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Our Top Picks
The U.S. economy is gathering steam. With the overall economy back on track, things are looking up for the transportation sector as well. This key sector (one of the top 16 Zacks sectors) is likely to end 2018 on a triumphant note. Consequently, growth potential of transportation services stocks make them lucrative.
We narrowed down our choice to four stocks with strong growth potential. Each of these stocks currently carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows price performance of our four picks in the last six months.
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Schneider National Inc. (SNDR - Free Report) is a transportation and logistics services company. It provide portfolio of premier truckload, intermodal and logistics solutions.
Schneider National has expected earnings growth of 50% for current year. The Zacks Consensus Estimate for the current year has improved by 2.2% over the last 60 days.
XPO Logistics Inc. (XPO - Free Report) is a third-party logistics provider offering expedient, single-source solutions for time-critical and service-sensitive shipments through its non-asset based transportation network.
XPO Logistics has expected earnings growth of 75.9% for current year. The Zacks Consensus Estimate for the current year has improved by 10.6% over the last 60 days.
ZTO Express Inc. (ZTO - Free Report) is an express delivery company. It provides express delivery service through its nationwide network as well as other value-added logistics services.
ZTO Express has expected earnings growth of 24.3% for current year. The Zacks Consensus Estimate for the current year has improved by 8.8% over the last 60 days.
Textainer Group Holdings Ltd. is the world’s largest lessor of intermodal containers with a total fleet of more than 1.3 million containers, representing over 2,000,000 TEU.
Textainer Group has expected earnings growth of 241.5% for current year. The Zacks Consensus Estimate for the current year has improved by 7.7% over the last 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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