Transportation stocks have struck a snag, and the reasons are pretty understandable, as the consensus offers the belief that restrictions surrounding the pandemic have played a prominent role in what we’ve seen in the last several quarters.
These restrictions have led to volatility in the transportation marketplace, thereby affecting airlines, trucking/logistics companies, railroad businesses, shipping companies, and even car rental operations. The transportation sector as a whole may not be in top form now, but certain stocks are doing well. Suppose you’re willing to take risks while wisely adding to your portfolio. In that case, it’s important to remember that the consensus also tells us that the sector is poised to make a comeback as the economic recovery marches forward.
The Dow Jones Transportation Average, believed to be the oldest U.S. stock index, has fallen about 10% from highs hit in May, placing the group in a correction after rising earlier this year and outperforming the S&P 500’s gains. This weakening comes as several major transportation businesses, including rail companies such as CSX (CSX) as well as airlines Southwest (LUV) and American (AAL), have recently released their Q2 earnings. These equities are frequently seen as a barometer of the country’s economic health. However, let’s focus on a few others that could prove beneficial:
Matson Inc (MATX)
This American container shipping firm serves Hawaii, Alaska, and Pacific nations such as Japan and China. Matson has been in the business for a long time, dating back to 1882. The company’s shipping fleet can transport cars in addition to containers. Its new Kanaloa class ships (which travel between Hawaii and California) include an enclosed garage that can hold 500 vehicles. Matson also has a booming personal moving and vehicle shipping industry throughout the Pacific. MATX’s Logistics business provides North American supply chain assistance for manufacturers, retailers, and distributors, including customs brokerage, warehousing, and truck/rail services.
A median 12-month price target of $75.00 represents an increase of 16.55% from the current price. MATX pays a $0.92 per share dividend, with a 1.39% annual yield. The consensus among surveyed experts is to buy MATX shares, and since June, its buy rating has been constant.
FedEx Corp (FDX)
FedEx Corporation is a well-known holding corporation that offers various transportation, e-commerce, and commercial services. The growth of internet shopping has been one of the major tales of the epidemic. Delivering all of those goods has pushed delivery firms, especially FedEx, to their limits. That was a disadvantage for the business during the worst of the pandemic. FedEx’s full-year 2020 revenue was down more than 2%, and the company’s diluted EPS (Earnings per share) of $5.01 last year was down $1.28 per share from the previous year. In 2021 however, they have already seen growth, as substantial home deliveries are expected to continue, along with a significant rise in commercial exports. When you include decreasing pandemic-related expenses, you have a formula for FDX stock growth.
A 12-month median price target of $360 implies a 21.42% increase from the current price. With a dividend yield of just over 1% and a payout of about $3.00, it’s agreed among surveyed financial experts that now is the time to purchase FDX shares.
Union Pacific Corp (UNP)
Union Pacific Corporation operates as a railroad and freight transportation company. Union Pacific Railroad Co., the company’s primary operational subsidiary, is a railroad franchise. The firm was established in 1969 and is based in Omaha, Nebraska. This industrial railroad has a vast track network across the western two-thirds of the United States, with multiple lines connecting the Mississippi River to the Pacific Ocean. Agricultural items, automobiles, chemicals, coal, and industrial products, are all part of the railroad’s diverse business mix.
Union Pacific Corp has a 12-month median price target of $251.00 with a high estimate of $269.00 and a low estimate of $195.00. The median price target implies a 14.25% gain. Its analyst-polled rating has been constant since early July when it upgraded from a buy to a hold. Nasdaq reports that it holds a dividend yield of 1.99%, with an annual payout of $4.28. According to polls, the experts agree that the right move is to purchase UNP shares.
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