The best performing stocks in the market are usually the highest growing stocks or the stocks with the highest expected growth rates. This doesn’t mean that one should be invested in growth stocks and stay away from the value stocks at all times. Historically value stocks managed to beat the growth stocks hand over fist. The reason is simple. Value stocks are beaten down stocks with very low or negative growth expectations. Not surprisingly it is easier for these stocks to beat the expectations on the average. On the other hand, everybody is extremely bullish about growth stocks and expects them to have higher growth rates in the future. Their stock prices also reflect this fact. Not surprisingly, it is more difficult for these stocks to beat these challenging expectations.
We ranked transportation companies based on their expected five-year growth rates. These stocks are at least $1 Billion in market cap. The data source is Yahoo Finance. Contrarian investors should look into the stocks that are at the top of the table.
Company name | Symbol | Market cap | Forward PE | Expected 5-Year Growth Rate |
Ship Finance Intl | 1.02B | 7.17 | -1.63 | |
Alexander & Baldwin, Inc. | 1.53B | 15.44 | 4.61 | |
Teekay LNG Partners L.P. | 1.83B | 15.47 | 6.39 | |
Copa Holdings, S.A. | 2.69B | 8.29 | 8.29 | |
United Parcel Service | 62.55B | 13.11 | 9.93 | |
GATX Corporation | 1.45B | 11.89 | 10.52 | |
Con-way Inc. | 1.22B | 9.27 | 10.91 | |
Canadian Pacific Railway | 8.05B | 10.4 | 11.06 | |
Wabtec Corporation | 2.54B | 12.73 | 12.24 | |
Knight Transportation | 1.08B | 14.46 | 12.36 | |
Werner Enterprises, Inc. | 1.54B | 13 | 12.38 | |
Norfolk Southern Corp. | 21.23B | 10.39 | 12.52 | |
Expeditors Intl of Washington | 8.55B | 19.17 | 12.53 | |
FedEx Corporation | 21.37B | 9.02 | 12.70 | |
CSX Corporation | 20.48B | 9.43 | 12.92 | |
C.H. Robinson Worldwide | 11.40B | 21.88 | 13.10 | |
Union Pacific Corporation | 40.20B | 10.54 | 13.18 | |
Canadian National Railway | 29.75B | 12.3 | 13.52 | |
Landstar System, Inc. | 1.90B | 15.31 | 13.92 | |
UTi Worldwide Inc. | 1.32B | 12.11 | 14.08 | |
Heartland Express, Inc. | 1.25B | 15.84 | 14.14 | |
J.B. Hunt Transport Services | 4.46B | 14.46 | 15.38 | |
Golar LNG Limited | 2.52B | 19.15 | 44.53 |
SFL is expected to shrink over the next five years. As a result its PE ratio is extremely low. Ken Griffin increased his position in SFL during the second quarter. Steven Cohen also held positions in SFL.
There are other transportation companies trading at lower prices because of low expected growth rates: ALEX and TGP. One of the stocks hedge funds are extremely bullish about is ALEX. Israel Englander, Jim Simons and Steven Cohen initiated brand new ALEX positions during the second quarter. Bill Ackman held $171 million position in ALEX at the end of the second quarter. Martin Whitman also had a $55 million position in ALEX.
Another stock that hedge funds heavily invested in during the past few months is UPS. Warrant Buffett held more than $104 million in UPS shares. Steven Cohen and Tom Gayner increased their positions in UPS by 3-fold and 9-fold respectively during the second quarter. Ken Griffin and Israel Englander also increased their positions, and Ray Dalio initiated a brand new UPS position during the second quarter.
CNW is also a promising stock. D.E. Shaw and Israel Englander increased their positions in CNW significantly during the second quarter. David Tepper held a $21.5 million position in CNW. Steven Cohen and Jim Simons also initiated $3.7 million and $1.8 million CNW positions.
Usually stocks with higher expected growth rates trade at much higher multiples. Some of the stocks with higher expected growth rates in our list have very attractive multiples. UNP, CSX, FDX and UTIW deserve a closer look.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
