Top Transportation Companies With The Highest Upside Potential

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 |  Includes: ALEX, CHRW, CNI, CNW, CP, CPA, CSX, EXPD, FDX, GATX, GLNG, HTLD, JBHT, KNX, LSTR, NSC, SFL, TGP, UNP, UPS, UTIW, WAB, WERN
by: Insider Monkey

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

SFL

1.02B

7.17

-1.63

Alexander & Baldwin, Inc.

ALEX

1.53B

15.44

4.61

Teekay LNG Partners L.P.

TGP

1.83B

15.47

6.39

Copa Holdings, S.A.

CPA

2.69B

8.29

8.29

United Parcel Service

UPS

62.55B

13.11

9.93

GATX Corporation

GMT

1.45B

11.89

10.52

Con-way Inc.

CNW

1.22B

9.27

10.91

Canadian Pacific Railway

CP

8.05B

10.4

11.06

Wabtec Corporation

WAB

2.54B

12.73

12.24

Knight Transportation

KNX

1.08B

14.46

12.36

Werner Enterprises, Inc.

WERN

1.54B

13

12.38

Norfolk Southern Corp.

NSC

21.23B

10.39

12.52

Expeditors Intl of Washington

EXPD

8.55B

19.17

12.53

FedEx Corporation

FDX

21.37B

9.02

12.70

CSX Corporation

CSX

20.48B

9.43

12.92

C.H. Robinson Worldwide

CHRW

11.40B

21.88

13.10

Union Pacific Corporation

UNP

40.20B

10.54

13.18

Canadian National Railway

CNI

29.75B

12.3

13.52

Landstar System, Inc.

LSTR

1.90B

15.31

13.92

UTi Worldwide Inc.

UTIW

1.32B

12.11

14.08

Heartland Express, Inc.

HTLD

1.25B

15.84

14.14

J.B. Hunt Transport Services

JBHT

4.46B

14.46

15.38

Golar LNG Limited

GLNG

2.52B

19.15

44.53

Click to enlarge

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.