The transportation segment is a mixed bag in normal times and COVID has further complicated matters. As things stand now, the industry, which has a Zacks Industry Rank of 67 out of more than 250 Zacks-classified industries, comprises companies of very different character, utilizing different transportation modes including air, railroads and water, different business models (asset-light or with owned fleets) and dealing in different kinds of goods (retail, commodity, fuel, building materials, medical, to name just a few). So it’s difficult to take a one-size-fits-all approach to investment in this area.
The GDP is the single most important indicator of health in the segment because the increase/decrease in the total volume of products has a corresponding effect on transportation of raw materials and finished goods. The GDP isn’t looking so hot right now.
Manufacturing data is another leading indicator because of much the same reasons. However, it’s important to note that the increasing consumption of services instead of physical goods both by the aged for things like healthcare and millennials and gen Z for “experience shopping” impacts shipping companies.
As far as fuels are concerned, coal is in secular decline while oil is a wildcard.
Fresh produce, food and staples are things that people consume no matter what, so companies dealing in these things have reason to cheer.
The other area that’s simply huge, that’s benefited from the pandemic and is likely to see continued growth is ecommerce. This is particularly beneficial for shipping and logistics companies because there’s reverse logistics and transportation involved as well when customers return stuff. Last-mile delivery is particularly important.
With that backdrop in mind, let’s take a look at a few stocks that look good from here-
Forward Air Corporation ( FWRD Quick Quote FWRD - Free Report)
Forward Air Corporation is an asset-light provider of ground transportation and related logistics services in the U.S. and Canada. Forward Air provides services within four business segments: Expedited less-than-load/truckload (LTL) (provides expedited regional, inter-regional and national LTL services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals); Truckload Brokerage (provides expedited truckload brokerage, dedicated fleet services, as well as high-security and temperature-controlled logistics services); Intermodal (provides first-and last-mile high-value drayage services both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services); and Pool Distribution (provides high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region).
Zacks Rank #1
June quarter earnings beat by 73.7% (reported 33 cents versus estimated 19 cents)
2020 estimated earnings up 8 cents (5.4%) in the last 7 days. 2021 estimate up 5 cents (2.0%)
Landstar System, Inc. ( LSTR Quick Quote LSTR - Free Report)
Landstar System, Inc. is an asset-light provider of integrated transportation management solutions including transportation logistics and insurance. The company has operations across the U.S., Canada and Mexico as well as other countries in North America. It deals in a large variety of goods including automotive products, building products, metals, chemicals, foodstuffs, heavy machinery, retail, electronics, and military equipment.
The company delivers safe, specialized transportation services to a broad range of customers utilizing a network of over 1,200 independent commission sales agents as well as over 66,000 third-party capacity owners.
The company’s business model is such that large part of its operating costs is directly proportional to revenues.
Zacks Rank #2
June quarter earnings beat by 36.1% (reported 98 cents versus estimated 72 cents)
2020 estimated earnings up 10 cents (2.5%) in the last 30 days. 2021 estimate up 12 cents (2.4%)
Marten Transport, Ltd. ( MRTN Quick Quote MRTN - Free Report)
Marten Transport is a long-haul truckload carrier providing protective service and time- sensitive transportation in the United States. The company specializes in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment. Marten operates through these featured services - Truckload, Dedicated, Intermodal and Brokerage. Marten Transport offers service in the United States, Canada and Mexico, concentrating on expedited movements for high-volume customers.
Zacks Rank #2
June quarter earnings beat by 43.5% (reported 33 cents versus estimated 23 cents)
2020 estimated earnings up 10 cents (10.2%) in the last 30 days. 2021 estimate up 7 cents (6.1%)
USA Truck, Inc. ( USAK Quick Quote USAK - Free Report)
USA Truck is engaged in the transportation of general commodity freight in interstate and foreign commerce. It transports freight between all points in continental U.S., and the Canadian provinces of Ontario and Quebec.
Zacks Rank #2
June quarter loss was lower by 33.3% (reported 6 cents loss versus estimated 9 cents loss)
2020 estimated loss down 10 cents (37.0%) in the last 7 days. 2021 earnings estimate up 9 cents (15.5%)
Werner Enterprises, Inc. ( WERN Quick Quote WERN - Free Report)
Werner Enterprises is a transportation and logistics company founded in 1956. Headquartered in Omaha, NE, the company is primarily focused on transporting truckload shipments such as retail store merchandise, consumer products, grocery products and manufactured products through two reportable segments — Truckload and Werner Logistics.
Zacks Rank #2
June quarter earnings beat by 55.0% (reported 62 cents versus estimated 40 cents)
2020 estimate up 24 cents (12.3%) in the last 7 days. 2021 estimate up 19 cents (8.0%)
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