The best transportation stocks to buy may help value investors get back on the high road, even if there are a few road bumps and potholes. Undoubtedly, it’s tough for those who appreciate simple, easy-to-understand businesses to top some of the firms helping America move things from A to B and back.
Whether we’re talking about moving massive long-haul shipments from coast to coast (think the railways) or just getting you to the doctor’s office across the city (think ride hailers), the transportation plays are crucial to a truly healthy economy.
Though some transportation stocks may be too economically sensitive for some, it’s arguable that the best transportation stocks to buy are worth holding through the ups and downs on the road. As the economy looks to get moving back to full speed, I’d not look past the following transportation plays as they look to pick up speed.
Uber Technologies (UBER)
Uber Technologies (NASDAQ:UBER) stock is the king of ride-hailing, food delivery and delivering just about anything within reason. However, the stock’s incredible 2023-24 rally came to a plunging halt in March, with UBER stock now down more than 16% from its early March peak.
Undoubtedly, the explosive rally was bound to end at some point. But the big question is whether the latest drop is just a correction (or a road bump) or if there are reasons why it may be time to book profits as the stock continues on its downward trajectory. Earlier this week, Uber reported some sub-optimal results that caused shares to slip around 9% at its worst before recovering meaningful ground intraday.
After digesting the recent results, it’s clear that the immediate reaction was a tad overdone. The first-quarter numbers were quite a mixed bag, with sales of $10.13 billion reportedly in line with the estimates.
The big shocker was that quarterly losses caught many off-guard while bookings fell short. At 53.5 times forward price-to-earnings (P/E), UBER stock isn’t exactly a bargain, but it’s still a leader, and I find it’ll bounce back after a recent windy road in the last quarter.
Union Pacific (UNP)
From ride-hailing to rail, we have Union Pacific (NYSE:UNP), a $150.5 billion transportation juggernaut that impressed after reporting its latest first-quarter earnings results. Margins were on the right track, even as fairly flat freight volumes weren’t all that impressive. Regardless, it was a solid quarterly beat for Union Pacific despite lingering macro headwinds.
Reportedly, Stifel upgraded UNP stock to Buy over the potential for even more operating ratio improvement. After a solid showing in the first quarter, I wouldn’t be surprised if the railway has more efficiency gains up its sleeves.
Though it has been choppy in recent years, I view UNP stock as an intriguing transport play that’s not too expensive at just over 22 times forward P/E. With a 2.11% dividend yield and a potential cup-and-handle technical pattern that I see in the stock chart, I’m inclined to view Union Pacific as one of the timelier transport players to buy on the back of its latest result.
FedEx (FDX)
Parcel delivery powerhouse FedEx (NYSE:FDX) is starting to see its past restructuring efforts pay off. Undoubtedly, layoffs, warehouse closures and other big changes are never ideal. But FedEx looks to be in a better spot after shifting a few things around after a rather turbulent past few years.
With a $5 billion buyback program, management seems incredibly confident in where the logistics firm is headed. Wall Street received The big buyback news favorably, which may mark the start of better days for a stock with no shortage of volatility since the pandemic began.
The buyback comes at a time when FDX stock looks pretty cheap. At 15.13 times trailing P/E, the well-established logistics play looks worth watching closely as it seems to get its foot back on the gas pedal.
On the date of publication, Joey Frenette did not hold (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.