It’s not a very encouraging topic, but if a serious market correction occurs, forward-looking contrarians might consider buying transportation stocks. Yes, it’s a boring sector, but there are ways to overcome the madness.
First, sectors represent the real economy. That is, where the rubber meets the road, both literally and figuratively. To be sure, the initial crash is painful for this and other industries. But when the economy recovers, as it always does, the transportation sector could be one of the first to benefit.
Second, and relatedly, ecosystems have enduring relevance. Modern society is built on states of motion, not on static states. Therefore, as long as commercial activity exists, there will be a need for movement of goods. On that note, here are the transportation stocks to buy.
CSX (CSX)
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One of the top transportation stocks to buy, CSX (NASDAQ:CSX) provides rail-based freight transportation services. According to its public profile, CSX specializes in intermodal container and trailer transportation and other sector-related services. This includes rail-to-truck transport and bulk goods transportation. After a strong start to the year, CSX stock has fallen nearly 8% in the last month.
Financially, the company is not setting new performance benchmarks. But he’s a consistent player and does what needs to be done. His average positive expected return for CSX over the past four quarters was 1.13%. Profitability is one of its core strengths and the company has realized a net profit of 24.75%. This is higher than his 88.79% of competitors.
Still, to be fair, investors are paying for that stability, with a forward earnings multiple of 17.42. This is higher than the sector median of 12.82 times. Nevertheless, analysts expect his earnings per share to be as high as $2.02. This is a considerable increase from last year’s result of he $1.85. As a result, CSX could be a strong buy candidate for transportation stocks.
Knight Swift Transportation (KNX)
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A well-known name in the freight transportation services industry, Night Swift Transportation (New York Stock Exchange:KNX) operates through four segments: Truckload, Less than Truckload (LTL), Logistics, and Intermodal. KNX stock is a good idea, but it also comes with risks. The stock has fallen more than 18% since the beginning of the year. Nevertheless, for speculators looking for deep discounts, KNX could quickly become interesting.
To be fair, the company has been very strong in terms of financial performance. For example, in the first quarter of this year, Nightswift’s EPS was 12 cents. This was significantly lower than the expected 20 cent print amount. Therefore, the red ink is justified. Still, the stock price has risen, with KNX currently trading at 1.07 times book value. It seems a little lighter.
Indeed, the expected EPS for fiscal year 2024 is only $1.45. This is far from the expected $1.72. Still, the most optimistic analysts think EPS of $2.53 is possible. The 2025 bottom line metric could rise to $3.99. Additionally, sales in 2025 could reach $9.11 billion. It’s a long-term outlook, but one worth keeping on your radar.
FedEx (FDX)
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One of the most famous transportation stocks to buy, fedex (New York Stock Exchange:FDX) also face competitive concerns. The company, like other transportation companies, also relies heavily on consumer sentiment. That said, business is evolving, and FedEx’s delivery services, such as next-day delivery, are likely to grow in demand.
of course, Amazon (NASDAQ:AMZN) The issue has clouded FedEx and its rivals as they invest in their own delivery services. Still, the rapid growth of the gig economy could boost FedEx’s sales. The company’s performance over the past four quarters reflects that FDX is not completely lost. Despite the earnings failure in the quarter ended Nov. 30, the average quarterly surprise was 7.6%.
FDX currently trades at 12.24 times forward earnings, which is decent. This assumes an expected EPS target of $17.80 by the end of fiscal 2024. At the highest end, EPS for fiscal 2025 could reach $18.10 and $23.30. If you want to gamble, FDX could be an interesting idea for transportation stocks. buy.
Publication date, Josh Enomoto did not have any positions (directly or indirectly) in any securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
