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3 Transportation Stocks to Buy Ahead of Q1 Earnings Season
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The Zacks Transportation sector was one of the worst-hit corners during the pandemic. After being battered in 2020 and 2021, with economic activities shrinking drastically, the fortunes of sector participants turned out for the better in 2022. Economic activities started bouncing back following the easing of the pandemic-induced restrictions. The scenario continues to be buoyant in 2023.
Upsides
Within the sector, the airline industry is witnessing increased passengers, with a continued rise in air-travel demand. The bright scenario is highlighted by data provided by the Transportation Security Administration (TSA) with respect to passenger volumes. In the first quarter of 2023 (January-March period), TSA checkpoint numbers revealed that passenger volumes not only surpassed the 2022 levels but also exceeded the 2019 (pre-coronavirus) numbers on many days.
It is hardly surprising that the pace of growth of e-commerce demand has slowed from the levels witnessed at the peak of the pandemic. Despite the slowdown, as economies re-open, the same has been impressive, driven by the convenience associated with online shopping. The race to digitization also supports the momentum in e-commerce growth. E-commerce demand strength should continue to support growth of industry players. Favorable pricing also bears good news for industry participants.
With economic activities gaining pace, more companies are allocating their increasing cash pile through dividends and buybacks to pacify the long-suffering shareholders, thereby underlining their financial strength and confidence in their businesses. For example, recently, FedEx Corporation’s(FDX - Free Report) board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend from $1.15 ($4.60 annualized) per share to $1.26 ($5.04 annualized).
3 Transportation Stocks to Buy Now
With the first-quarter 2023 earnings season around the corner, we have highlighted three stocks —American Airlines (AAL - Free Report) , Copa Holdings (CPA - Free Report) and FedEx — from the Transportation sector. The companies carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
These companies have witnessed impressive earnings estimate revisions for the current year. Also, all the above-mentioned stocks have outperformed the sector with respect to price in the first quarter of this 2023.
Image Source: Zacks Investment Research
Copa Holdings: The company is benefiting from the improvement in air-travel demand. In fourth-quarter 2022, passenger revenues increased 29.5% due to higher yields. CPA’s focus on its cargo segment is encouraging as well. In fourth-quarter 2022, cargo and mail revenues grew 69%, owing to higher cargo volumes and yields. Copa Holdings' fleet modernization and cost-management efforts are commendable.
The above-mentioned tailwinds are likely to continue aiding this Latin American carrier that currently sports a Zacks Rank #1. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 12.3% upward over the past 60 days.
American Airlines: The company, currently carrying a Zacks Rank of 2, is seeing a steady recovery in domestic air-travel demand. AAL has an expected earnings growth rate of more than 100% for the current year.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 19.6% over the past 60 days. AAL delivered a trailing four-quarter earnings surprise of 7.79%, on average.
FedEx: The company, currently carrying a Zacks Rank of 2, is being well served by its cost-cutting efforts. The cost-saving endeavors are driving its bottom line amid weakening demand. Efforts to reward its shareholders also bode well.
FDX’s management expects earnings per share between $14.6 and $15.2 for 2023 (prior to MTM retirement plans accounting for adjustments, and excluding estimated costs related to business optimization initiatives and costs related to business realignment activities). The Zacks Consensus Estimate for FDX’s current-year earnings has improved 6.9% over the past 60 days. The company delivered a trailing four-quarter earnings surprise of 8.8%, on average.
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3 Transportation Stocks to Buy Ahead of Q1 Earnings Season
The Zacks Transportation sector was one of the worst-hit corners during the pandemic. After being battered in 2020 and 2021, with economic activities shrinking drastically, the fortunes of sector participants turned out for the better in 2022. Economic activities started bouncing back following the easing of the pandemic-induced restrictions. The scenario continues to be buoyant in 2023.
Upsides
Within the sector, the airline industry is witnessing increased passengers, with a continued rise in air-travel demand. The bright scenario is highlighted by data provided by the Transportation Security Administration (TSA) with respect to passenger volumes. In the first quarter of 2023 (January-March period), TSA checkpoint numbers revealed that passenger volumes not only surpassed the 2022 levels but also exceeded the 2019 (pre-coronavirus) numbers on many days.
It is hardly surprising that the pace of growth of e-commerce demand has slowed from the levels witnessed at the peak of the pandemic. Despite the slowdown, as economies re-open, the same has been impressive, driven by the convenience associated with online shopping. The race to digitization also supports the momentum in e-commerce growth. E-commerce demand strength should continue to support growth of industry players. Favorable pricing also bears good news for industry participants.
With economic activities gaining pace, more companies are allocating their increasing cash pile through dividends and buybacks to pacify the long-suffering shareholders, thereby underlining their financial strength and confidence in their businesses. For example, recently, FedEx Corporation’s (FDX - Free Report) board of directors approved a dividend hike of 10%, thereby raising its quarterly cash dividend from $1.15 ($4.60 annualized) per share to $1.26 ($5.04 annualized).
3 Transportation Stocks to Buy Now
With the first-quarter 2023 earnings season around the corner, we have highlighted three stocks —American Airlines (AAL - Free Report) , Copa Holdings (CPA - Free Report) and FedEx — from the Transportation sector. The companies carry a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
These companies have witnessed impressive earnings estimate revisions for the current year. Also, all the above-mentioned stocks have outperformed the sector with respect to price in the first quarter of this 2023.
Image Source: Zacks Investment Research
Copa Holdings: The company is benefiting from the improvement in air-travel demand. In fourth-quarter 2022, passenger revenues increased 29.5% due to higher yields. CPA’s focus on its cargo segment is encouraging as well. In fourth-quarter 2022, cargo and mail revenues grew 69%, owing to higher cargo volumes and yields. Copa Holdings' fleet modernization and cost-management efforts are commendable.
The above-mentioned tailwinds are likely to continue aiding this Latin American carrier that currently sports a Zacks Rank #1. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 12.3% upward over the past 60 days.
American Airlines: The company, currently carrying a Zacks Rank of 2, is seeing a steady recovery in domestic air-travel demand. AAL has an expected earnings growth rate of more than 100% for the current year.
The Zacks Consensus Estimate for AAL’s current-year earnings has improved 19.6% over the past 60 days. AAL delivered a trailing four-quarter earnings surprise of 7.79%, on average.
FedEx: The company, currently carrying a Zacks Rank of 2, is being well served by its cost-cutting efforts. The cost-saving endeavors are driving its bottom line amid weakening demand. Efforts to reward its shareholders also bode well.
FDX’s management expects earnings per share between $14.6 and $15.2 for 2023 (prior to MTM retirement plans accounting for adjustments, and excluding estimated costs related to business optimization initiatives and costs related to business realignment activities). The Zacks Consensus Estimate for FDX’s current-year earnings has improved 6.9% over the past 60 days. The company delivered a trailing four-quarter earnings surprise of 8.8%, on average.