After a protracted period of downturn, the best transportation stocks are returning in great numbers; freight demand is starting to show indications of revival, as is airline demand.
The industry is also using carrier onboarding and capacity-matching technologies like generative artificial intelligence. This shift to data-driven logistics should boost efficiency and eliminate supply chain bottlenecks.
One research predicts the market will expand to $15.94 trillion in 2032 from $7.31 trillion in 2022 because of generative AI and secular development in the transportation sector.
The International Air Transportation Association reported a 9.1% rise in passenger demand in June 2024 compared to June 2023 for domestic and international travel, completely rebounding from the epidemic. Available seat kilometers increased by 8.5%, indicating airlines are increasing seats to satisfy demand.
When choosing the finest transportation stocks, be cautious since economic situations may affect transportation. Despite lowering prices, U.S. inflation remains a worry. This and high borrowing rates constrain consumer spending, lowering goods demand. Still, American industrial production and retail sales may boost the top transportation stocks.
Amid these circumstances, let’s look into three of the best transportation stocks, all rated “Strong Buy” and with double-digit potential upsides.
United Airlines (UAL)
United Airlines (NASDAQ:UAL) is doing well this year thanks to upbeat travel demand. With an average price target of $71.70, analysts have a consensus “Strong Buy” recommendation on UAL shares, meaning a 74% upside potential from the last close of $41.18.
As travel demand returns, United Airlines will keep growing its worldwide network in 2024, especially by means of its alliance with Lufthansa (OTCMKTS:DLAKY) and Deutsche Bahn. This cooperation offers additional travel alternatives and simplified connections for passengers, therefore improving connectivity between the United States and Germany.
United is also expanding its route choices to other locations, including direct flights between the United States and newly established international airports such as Tulum in Mexico.
Additionally, United is making investments in airport infrastructure; major projects, including the $2.6 billion expansion at George Bush Intercontinental Airport, are in progress. New terminals and a modern baggage system developed in this project will improve operational efficiency and passenger experience by itself.
United Airlines partnered with Nestle (OTCMKTS:NSRGY) to buy up to 1 million gallons of Sustainable Aviation Fuel. Chicago O’Hare International Airport will utilize this fuel through 2024. The effort supports United’s objective of decreasing its carbon footprint, which will highlight it among ESG-conscious investors.
Uber (UBER)
After an unexpected first-quarter loss, Uber (NYSE:UBER) shares jumped after the ride-hailing and food-delivery company’s second-quarter results that surpassed expectations; the earnings beat illustrates financial robustness in a tough market, complementing its “Strong Buy” consensus rating and potential upside of 21%.
With a 16% year-over-year rise in revenue to $10.7 billion, Uber revealed robust financial statistics for the second quarter of 2024. This result shows the company’s consistent expansion path and surpassed Wall Street estimates. A key driver of Uber’s expansion is its capacity to increase its income sources, especially via its advertising division.
At a $1 billion yearly run rate, Uber’s advertising division now generates a significant portion of the company’s income. Creative ad formats across various platforms and alliances with organizations like The Trade Desk (NASDAQ:TTD), Yahoo DSP, and Google drive this expansion. To increase its income sources even further, the corporation is also investigating new ad formats like playable advertisements.
To introduce 100,000 new electric cars into its network across important worldwide markets, Uber has teamed with top manufacturer BYD (OTCMKTS:BYDDF). This alliance fits Uber’s environmental commitment and its aim to become a totally electric platform in the not-too-distant future.
Uber keeps developing and broadening its product line. This covers Uber Eats’ growth under alliances like Costco (NASDAQ:COST) delivery as well as fresh ride-sharing choices like Uber Shuttle. These initiatives seek to boost consumer value and, thereby, market share.
XPO (XPO)
XPO (NYSE:XPO) reported strong second-quarter 2024 sales of $2.1 billion, up 9% year-over-year. Adjusted diluted profits per share rose 58% to $1.12, above Wall Street’s $1.01 forecast. This growth highlights XPO’s successful strategies in the less-than-truckload transportation sector, further enhancing the appeal of XPO stock, which holds a potential upside of 14%.
Operating income in XPO’s LTL division rose significantly and jumped by 50% over last year. This is reflected in higher production, shipments, and daily tonnage, which shows the company’s great operating efficiency.
Aiming to enhance trade channels between the United States and Mexico, XPO has extended its cross-border LTR service with a new product named “XPO Mexico+.” This project fits into XPO’s larger plan to maintain its leadership in North American logistics.
XPO has also said that additional service centers—including a sizable one in Las Vegas—are coming. This development is meant to help the company expand trade show shipping services and improve its general capacity for goods transportation across important American areas.
On the date of publication, Faizan Farooque did not have (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
