While it might be difficult to believe in a broader economic recovery with all the ugly headwinds, it’s possible that circumstances might improve, thus bolstering transportation stocks to buy. Fundamentally, the economy has proven resilient. In fact. despite the failure of three major regional banks, commercial activity keeps on chugging.
In addition, the unemployment rate is extremely low, considering we just passed through a once-in-a-century pandemic. To be fair, rising layoffs – especially in the technology sphere – present concerns. However, at the moment, anyone that wants a job can get a job. That’s likely to lift transportation stocks to buy based on the need to move goods across the country (and the world). Again, it’s not a clear-cut pathway to the upside considering the wider difficulties. Still, if you believe in the recovery accelerating, these are the transportation stocks to buy.
JB Hunt (JBHT)
An American logistics and transportation company, JB Hunt (NASDAQ:JBHT) is one of the well-known players among transportation stocks to buy. Primarily operating large semi-trailer trucks, JB Hunt covers the continental U.S., Canada, and Mexico. Since the beginning of this year, JBHT dipped 1%. However, in the past 365 days, it gained over 6% of equity value.
Overall, the company offers a solid financial canvas. In particular, its debt-to-equity ratio sits at 0.33, favorably lower than the sector median stat of 0.6. Also, its Altman Z-Score hits 5.13, reflecting fiscal stability and a low risk of imminent bankruptcy.
Operationally, JB Hunt prints a three-year revenue growth rate of 18.5%, ranked better than 80.78% of its peers. As well, its EBITDA growth rate pings at 18.1%, ranked above 65.53%. Finally, Wall Street analysts peg JBHT as a consensus moderate buy. Their average price target lands at $190.58, implying nearly 12% upside potential.
Another intriguing player among transportation stocks to buy, Saia (NASDAQ:SAIA) may offer a case of strength begetting strength. Since the Jan. opener, the SAIA stock popped up more than 35%. Over the past one-year period, shares gained 53% of market value. The company specializes in less-than-truckload (LTL) shipping services.
Overall, what should attract investors to SAIA centers on its robust financial metrics. Notably, the underlying enterprise features excellent stability in the balance sheet. For example, its cash-to-debt ratio comes in at 1.15, ranked better than 70.11% of the competition. Also, its Altman Z-Score lights up the board at 10.38, indicating high stability and very low bankruptcy risk.
Operationally, Saia benefits from a three-year revenue growth rate of 15.7%, ranked above 77.11% of its peers. As well, its EBITDA growth rate during the same period impresses at 31.7%. Lastly, covering analysts peg SAIA as a consensus moderate buy. Their average price target comes in at $311.38, implying over 10% upside potential.
ZTO Express (ZTO)
While American investors should generally focus on domestic plays – under the framework that you can better trust what you know – going abroad for certain transportation stocks to buy might not be a bad idea. A case in point is China’s ZTO Express (NYSE:ZTO). With the consumer economy slowly recovering from the Chinese government’s draconian Covid-19 policies, ZTO may have more to give.
Since the Jan. opener, ZTO gained over 5% of its equity value. Looking at its financials, further upside won’t be unexpected. For one thing, ZTO benefits from a strong balance sheet. Its cash-to-debt ratio clocks in at 1.33, ranked above 73% of other transportation players. Also, its equity-to-asset ratio pings at 0.69, much better than the industry median stat of 0.47 times. On the operational side, ZTO’s three-year revenue growth rate comes in at 15.5%, above 76.67% of its peers. Also, its book growth rate during the same period is 10.8%, above over 71% of rivals.
To close, analysts peg ZTO as a unanimous strong buy. Their average price target stands at $33, implying nearly 14% upside potential.
Covenant Logistics (CVLG)
Headquartered in Chattanooga, Tennessee, Covenant Logistics (NASDAQ:CVLG) is one of the more enticing plays among transportation stocks to buy. Focused on truckload shipping, Covenant provides temperature-controlled trucking, regional delivery, and long-haul team driver delivery. Also, the company carries a market capitalization of only $504.43 million, facilitating strong chart mobility.
Indeed, since the January opener, CVLG gained 12% of its equity value. In the trailing one-year period, CVLG nearly doubled in value (up 96%). Financially, Covenant provides justification for the enthusiasm. In particular, the company’s three-year revenue growth rate pings at 18.2%, ranked above 80.11% of sector players. Also, its EBITDA growth impresses at 40.7%.
Perhaps most conspicuously for traders, the market prices CVLG at a forward multiple of 10.28. As a discount to projected earnings, Covenant ranks better than 60.56% of the competition. Turning to Wall Street, analysts peg CVLG as a consensus moderate buy. Also, their average price target hits $46.67, implying almost 20% upside potential.
Forward Air (FWRD)
Also based in Tennessee, Forward Air (NASDAQ:FWRD) serves businesses of all sizes with its transportation acumen. Specifically, it aims to be a single-source provider of extensive ground transportation options. It’s one of the more sizable enterprises among the national coverage entities, commanding a market cap of $2.56 billion. Since the start of the year, though, FWRD dipped nearly 6%.
Still, Gurufocus identifies Forward Air as a modestly undervalued idea among transportation stocks to buy. In particular, the market prices FWRD at 0.53 times discounted cash flow (DCF). In contrast, the sector median stat comes in at a higher 0.73 times.
Also, Forward enjoys broad financial strengths. On the sales front, its three-year revenue growth rate pings at 19.5%, ranked better than 81.67% of the field. Also, its trailing-year net margin stands at 9.66%, above 64.48% of competitors. Looking to the Street, analysts peg FWRD as a consensus strong buy. Their average price target lands at $117.40, implying over 19% upside potential.
A holding company, ArcBest (NASDAQ:ARCB) specializes in truckload and LTL freight, freight brokerage, household goods moving, and transportation management services. One of the top-performing transportation stocks to buy, ARCB gained nearly 27% of market value since the Jan. opener. In the trailing 365 days, ARCB returned shareholders almost 31%. Presently, it features a market cap of just over $2 billion.
Despite its robust performance, ARCB may be undervalued. Currently, the market prices shares at a forward multiple of 9.99. As a discount to projected earnings, ArcBest ranks better than 63.33% of enterprises listed in the transportation sector. Operationally, ArcBest’s three-year revenue growth rate pings at 22.7%, ranked above 85.11% of the field. Also, its free cash flow growth rate comes in at 67%, outflanking 86.24% of its peers.
Lastly, analysts peg ARCB as a consensus moderate buy. Their average price target hits $111.71, implying over 28% upside potential.
Radiant Logistics (RLGT)
While one of the most speculative transportation stocks to buy, Radiant Logistics (NYSEAMERICAN:RLGT) enjoys strong support among experts. Therefore, it’s possible that it could swing higher and to a great magnitude. Also, it’s worth pointing out that Radiant’s market cap is just under $307 million. If economic conditions come in better than anticipated, RLGT could fly.
Unlike other speculative entities, the financials underlying Radiant offer a rational reason for hope. For instance, the company benefits from a decently stable balance sheet. Its Altman Z-Score pings at 4.6, indicating stability and low bankruptcy risk.
Operationally, Radiant prints a hearty three-year revenue growth rate of 18.2%, above 80.11% of its rivals. Also, the market prices RLGT at a trailing multiple of 9.49. As a discount to earnings, the transportation specialist ranks better than 60.11% of the competition. On a final note, analysts peg RLGT as a unanimous strong buy. Their average price target lands at $10.33, implying over 60% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.