7 Transportation Stocks to Buy for Big, Long-Term Gains

  • Here are seven transportation stocks to buy for big, long-term gains.
  • Canadian Pacific Railway (CNI): The Canadian railroad company just reported record earnings.
  • General Motors (GM): The Detroit automaker is leading the EV revolution.
  • Kirby (KEX): The barge operator transports chemicals along the Mississippi River system.
  • Read more for the full list of transportation stocks to buy!
transportation stocks - 7 Transportation Stocks to Buy for Big, Long-Term Gains

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Transportation isn’t new or exciting. It’s about as far away from A.I. chatbots as an investor can get. That said, transportation stocks remain integral to the U.S. economy, contributing more than 5% of the country’s gross domestic product (GDP) annually, or about $1.3 trillion.

Indeed, the movement of people and goods by land, air and water continues to be big business throughout the U.S. and all of North America. Without successful transportation networks and corridors, the U.S. economy literally couldn’t function. For this reason, investors should consider investing in transportation stocks.

Not only are there many to choose from, but transportation stocks tend to be mature and established companies with a track record of delivering strong earnings growth and returns to shareholders. Here are seven of the best transportation stocks to buy for big, long-term gains.

CNI Canadian National Railway $118.65
GM General Motors $31.69
KEX Kirby $70.76
BA Boeing $197.05
ODFL Old Dominion Freight Line $312.24
NCLH Norwegian Cruise Lines $13.75
CP Canadian Pacific Kansas City $197.05

Canadian National Railway (CNI)

Railroad tracks with a junction
Source: Shutterstock

Kicking off this list of transportation stocks to buy is Canadian National Railway (NYSE:CNI), a company that is coming off a hot quarter. The railway operator that serves all of Canada and the midwestern U.S. just reported record first-quarter revenue of CAD$4.31 billion (US$3.16 billion) due largely to strong grain shipments and elevated oil prices. The company’s Q1 revenue was a 16% improvement from a year earlier. Earnings per share also grew 38% in Q1 to CAD$1.82 from CAD$1.32 a year earlier, and beat the CAD$1.72 consensus forecast of analysts surveyed by Refinitiv.

Equally encouraging was the fact that Canadian National Railway raised its full-year 2023 guidance, forecasting earnings per share growth in the mid-single digits, up from a low single-digit target previously. The company also raised its quarterly dividend nearly 10% to CAD79 cents per share to be paid on June 30. The dividend yield now stands at right around 2%. CNI stock is flat over the past 12 months (up a slight 0.94%), offering a nice entry point to investors. Over five years, the company’s share price is up 52%.

General Motors (GM)

Image of General Motors logo on corporate building with clear sky in the background.
Source: Katherine Welles / Shutterstock.com

Speaking of hot quarters, how about General Motors (NYSE:GM). The Detroit automaker announced first-quarter earnings that beat Wall Street expectations on both the top and bottom lines, and lifted its full-year 2023 guidance. Notably, GM reported earnings per share of $2.21 versus $1.73 that was expected on Wall Street, according to Refinitiv data. GM’s Q1 revenue totaled $39.99 billion versus $38.96 billion that was forecast by analysts who cover the company. Looking ahead, the company said it expects earnings of between $11 billion and $13 billion this year.

The company’s Q1 results were praised by analysts and investors, who bid up GM stock 4% immediately following the latest earnings print. However, just before the Q1 financials were made public, General Motors announced plans to invest more than $3 billion in a new battery cell manufacturing plant in the U.S., with a target date to begin operations in 2026. That was the latest announcement made by the company concerning its electric vehicle strategy.

In all, GM is putting $35 billion towards electrifying its vehicle fleet. GM stock is down 14% over the past year.

Kirby (KEX)

A photo of a large shipping vessel at sea.
Source: Daniel Wright98 / Shutterstock.com

While not a household name, Kirby Corp. (NYSE:KEX) is nevertheless an important transportation company. The Texas-based firm is the largest barge operator in the U.S., moving bulk liquid products along the Mississippi River and into the Gulf of Mexico, as well as along the U.S. coasts. Kirby even operates in Alaska and Hawaii. Products transported by Kirby through its barges include important items such as petrochemicals, oil, refined petroleum, and agricultural chemicals such as fertilizers.

The business requires specialization, which gives Kirby a moat around its business and a niche role when it comes to transportation in the U.S. Impressively, Kirby has been operating since 1969, Kirby continues to report impressive earnings, most recently announcing that its first-quarter results beat on both the top-and bottom-lines. While not as widely known or followed by investors, Kirby can be viewed as a dark horse among transportation stocks. In the past 12 months, KEX stock has risen 15%.

Boeing (BA)

It Will Be a Very Long Road to Recovery for BA Stock
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Commercial aircraft manufacturer Boeing Co. (NYSE:BA) continues to take knocks. The latest blow to the company came in mid-April when it announced that it would halt deliveries of some 737 MAX airplanes due to technical problems. Specifically, Boeing said that it has run into quality problems with the parts of the 737 MAX aircraft that are manufactured by Spirit AeroSystems (NYSE:SPR). Boeing said the issue concerns aft fuselage fittings supplied by Spirit that date back to 2019.

Boeing warned that the problem will impact a number of undelivered 737 MAX airplanes both in production and in storage and could result in lower deliveries worldwide this year. Accordingly, this was the latest setback for a company that has been operating under a microscope since its 737 MAX aircraft were grounded worldwide between March 2019 and December 2020, following two crashes of those aircraft. Despite the turmoil, BA stock has proved resilient and is up 36% over the last 12 months. Notably, Boeing remains part of a duopoly when it comes to commercial aircraft manufacturing, along with France’s Airbus SE (EPA:AIR).

Old Dominion Freight Line (ODFL)

trucking stocks Aerial Top View of White Semi Truck with Cargo Trailer Parking with Other Trucks on Special Parking Lot.
Source: Gorodenkoff / Shutterstock.com

Old Dominion Freight Line (NASDAQ:ODFL) is a major truck transportation company in the U.S., operating nearly 6,000 trucks nationwide. The company moves goods from shipping terminals on America’s coasts inland via the national highway system. It’s not a cutting-edge business, but it is essential to keep the economy moving. Additionally, Old Dominion provides household moving services to individuals across the U.S.

ODFL stock has been a strong performer over the past year. Over the last 12 months, the company’s shares have sped through the ongoing market volatility and delivered a 13% gain to shareholders. Over the past five years, the company’s stock has increased an impressive 252%. Old Dominion, which has been in operation for nearly 90 years, also continues to deliver for shareholders in other ways, announcing in February this year that it is raising its quarterly dividend 33% to 40 cents a share.

Norwegian Cruise Lines (NCLH)

cruise stocks docked cruise ships. CCL stock.
Source: Kokoulina / Shutterstock.com

We should include a cruise line here, and Norwegian Cruise Lines (NYSE:NCLH) gets the nod. Indeed, the Miami-based cruise ship operator has come roaring out of the pandemic, recently reporting that its first-quarter revenue rose a whopping 249% to $1.82 billion from $521.9 million a year earlier when it was still dealing with Covid-19 restrictions on its operations. Citing improving travel demand, Norwegian also raised its full-year guidance, saying it expects a full-year 2023 profit of 75 cents per share compared with 70 cents previously.

Norwegian Cruise Lines has the advantage of catering to affluent travelers, and has successfully raised the prices of its tickets over the last six months to offset the impacts of higher fuel and food costs, driven by inflation. The company announced that its occupancy rate during Q1 was 101.5%, up from 86.6% in the previous fourth quarter of 2022. While Norwegian reported a Q1 loss of 30 cents a share, it was better than the 41 cent per share loss expected among analysts. And the company says it is on track to return to profitability in coming months.

NCLH stock is up 20% year to date.

Canadian Pacific Kansas City (CP)

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We’ll end as we began, with a railway. This time it is the recently-merged railroad Canadian Pacific Kansas City (NYSE:CP) that came together on April 14 of this year after regulators approved the $31 billion combination. This merger created the only railroad that connects the U.S., Canada and Mexico, creating a continental transportation company for North America. The company just reported its first earnings since the merger was finalized, and the results show that benefits are already being realized.

Canadian Pacific Kansas City reported net income for this year’s first quarter of $800 million, which was up 36% from $590 million a year earlier. Earnings per share came in at 86 cents, up 37% from 63 cents a year ago, while revenue rose 23% from a year earlier to $2.27 billion. The newly created railroad company said the merger led its overall shipment volumes to rise 11% compared with the first quarter of 2021. Notably, CP stock has gained nearly 10% since the merger between Canadian Pacific Railway and Kansas City Southern was finalized in mid-April.

On the date of publication, Joel Baglole held a long position in GM. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2023/05/transportation-stocks-to-buy/.

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