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6 Reasons Why Investors Should Add GATX to Their Portfolio

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GATX Corporation (GATX - Free Report) is benefitting from the gradual improvement in the North American railcar leasing market and shareholder-friendly measures.

Against this backdrop, let’s look at the factors that make this stock an attractive pick.

An Outperformer: GATX has risen 13.9% in the past year compared with the industry’s 1% increase.

Zacks Investment Research
Image Source: Zacks Investment Research

Solid Rank: GATX currently carries a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank of 1 or 2 offer attractive investment opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northward Estimate Revisions: One estimate for 2022 has moved upward in the past 60 days, indicative of analysts’ confidence in the stock. The Zacks Consensus Estimate for 2022 earnings has moved 1.4% north in the past 60 days.

Positive Earnings Surprise History: GATX has a stellar earnings surprise history. Earnings outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 40.8%.

Strong Prospects: The Zacks Consensus Estimate for 2022 earnings is pegged at $5.78, implying growth of 14.2% from the year-ago reported figure.  

Driving Factors: The gradual uptick in the North American railcar leasing market is a huge positive for GATX. Management expects recovery in the North American railcar leasing market to continue in 2022. Market lease rates are expected to be higher than the average expiring rates for railcars renewing during the year. Besides, more asset disposition gains are expected to boost profits at the Rail North America segment in 2022. The decrease in the number of idle railcars is a sign of improvement in the industry and this bodes well for GATX.

GATX, which has been paying regular dividends since 1919, holds an impressive record with respect to dividends and buybacks. In January 2022, the entity raised its quarterly dividend by 4% to 52 cents per share. Its commitment to rewarding its shareholders despite coronavirus-related disruptions is encouraging. Notably, the current year marks the 104th consecutive year of GATX paying out dividend.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector can also consider stocks like Ryder System, Inc. (R - Free Report) , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and Golar LNG Limited (GLNG - Free Report) .

Ryder has a trailing-four surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States. Revenues at all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022.

Driven by the tailwinds, the stock has risen marginally in the year-to-date period.  R currently sports a Zacks Rank #1.

The long-term expected earnings per share (EPS) (three-to-five years) growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW. In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight.

Driven by the positives, the stock has rallied 9.6% in the past year.  CHRW currently sports a Zacks Rank of 1.

Golar LNG has a trailing-four quarter surprise of 50%, on average, with its earnings having surpassed the Zacks Consensus Estimate in three of the last four quarters (one miss). GLNG is benefiting from an improved shipping performance. The shipping unit has been performing well so far, aiding its top line.

Driven by the upsides, the stock has soared 108.4% in the past year.  GLNG currently flaunts a Zacks Rank of 1.