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Buy 3 Transportation Stocks That Gained More Than 50% This Year

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The widely-diversified transportation sector, which includes airlines, railroads, package delivery companies and truckers to name a few, was one of the hardest-hit corners in the investing space during the pandemic. However, with the easing of the COVID-induced restrictions, economic activities have gained pace this year.

This improved scenario has been a boon for transportation companies that have bounced back this year after being laid low over the past few years. The favorable scenario surrounding the sector implies that investing in transportation stocks is a prudent move. We believe that stocks like Universal Logistics (ULH - Free Report) , GasLog Partners (GLOP - Free Report) and Dorian LPG (LPG - Free Report) offer compelling investment opportunities.

Tailwinds Surrounding the Sector

The corner of the sector that houses airline stocks has been well-served by the stronger-than-expected recovery in air-travel demand as people are again booking flights, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines.

Moreover, owing to the uptick in economic activities, freight demand continues to be strong despite minor hiccups. This is supporting growth for railroad operators and transportation service providers. The Cass Freight shipments Index improved 2.9% year over year in October. The overall improving trend is evident from the fact that the measure has improved year over year in six (February, March, July, August, September and October) of the 10 months reported so far this year.

Even though economies are reopening, consumers’ urge for online shopping refuses to relent. This continued strength in e-commerce demand bodes well for packaging companies in the sector.

Moreover, owing to increased demand, the financial health of transportation companies has improved this year. As a result, we have seen many companies in the space hiking dividends. Investors are always on the lookout for dividend stocks as these provide a steady source of income and a cushion against market uncertainty, as is the current scenario. Dividend stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty.

Owing to the abovementioned tailwinds surrounding the sector, we believe that adding transportation stocks to one’s portfolio for generating handsome returns is a prudent move. We have zeroed in on three transportation stocks by running the Zacks Stocks Screener. Our choices have had a stellar run on the bourse this year, each gaining in excess of 50% year to date.

Zacks Investment Research
Image Source: Zacks Investment Research

Also, the selected stocks currently carry either a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). The stocks have been witnessing favorable earnings estimate revisions as well. You can see the complete list of today’s Zacks #1 Rank stocks here

Our Choices

Universal Logistics, currently sporting a Zacks Rank #1, is a provider of customized transportation and logistics solutions. The company offers services across its entire supply chain, including truckload, brokerage, intermodal, dedicated and value-added services.

Owing to the uptick in economic activities, the contract logistics and intermodal segments of ULH are performing well, in turn boosting top-line growth. Driven by the positives, shares of ULH have surged 97.7% so far this year. The Zacks Consensus Estimate for current-year earnings has been revised 10.3% upward over the past 60 days. For 2023, the consensus mark for earnings has moved 5.8% north in the same time frame. The favorable estimate revisions reflect the confidence of brokers in the stock. ULH currently has a Growth Score of A.

GasLog owns, operates and acquires LNG carriers with multi-year charters. The firm charges customers for transporting their LNG using its LNG carriers.

GasLog currently flaunts a Zacks Rank of 1. The strong LNG market boosted the stock, which has surged 82.9% year to date. Over the past 60 days, the Zacks Consensus Estimate for 2022 earnings has moved 42.6% north. For 2023, the consensus mark for earnings has moved 48.6% north in the same time frame. GLOP currently has a Growth Score of B.

Dorian LPG is our final choice. Shares of LPG have surged 57.5% year to date, riding on the strength of the freight market. Efforts to reward its shareholders through dividends also bode well.

Over the past 60 days, the Zacks Consensus Estimate for 2022 earnings has surged 100.7% north. For 2023, the consensus mark for earnings has moved 114.7% north in the same time frame. LPG currently has a Growth Score of B and carries a Zacks Rank of 2.


In-Depth Zacks Research for the Tickers Above


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GasLog Partners LP (GLOP) - free report >>

Dorian LPG Ltd. (LPG) - free report >>

Universal Logistics Holdings, Inc. (ULH) - free report >>

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