These logistics stocks can be considered blue chips, in my opinion. That is thanks to their longstanding operations, competitive moats and ability to keep their free cash flows ticking quarter over quarter. Furthermore, many of the companies on this list pay juicy dividends in addition to their predicted capital appreciation in the future.
So, here are seven top transportation stocks to buy for March this year.
Knight-Swift Transportation (KNX)
Knight-Swift Transportation (NYSE:KNX) operates freight transportation services in the U.S. and Mexico.
I like KNX stock since it’s a contrarian play I think could pay off for investors. KNX stock faced significant headwinds in Q4 2023. The company reported a steep decline in operating income by 91% compared to Q4 2022, primarily due to a significant operating loss in third-party insurance. That contributed to a net loss of $10.7 million for the quarter.
But looking ahead, KNX sees a slight sequential decline in truckload margins but expects improvements in the second quarter. The company projects mid-single-digit year-over-year increases in truckload miles per tractor.
Still, the market appears to remain bullish on the company’s prospects overall, as it has gained 72% in the past five years and dipped around 6% over the past year. Its operating losses are a short-term headwind, and it is on a strong path to recovery.
XPO (XPO)
XPO (NYSE:XPO) offers freight transportation services across the United States, North America, the United Kingdom and Europe.
I think XPO has good momentum potential. That is because a month ago, the company made headlines with its financial results that I believe will continue into this year. XPO’s standout performance in the fourth quarter includes surpassing analyst estimates with earnings per share of $0.77 on revenue of $1.94 billion, reaching a 6% year-over-year revenue growth. That achievement was accompanied by a 28% increase in adjusted EBITDA compared to the prior year, alongside a significant improvement in operating ratio, reaching 86.5%.
Wall Street also sees big things in the making for XPO, as its revenue is forecasted to grow 7.94% to 8.4 billion this year, while its EPS is expected to leap 118% to 3.49. These qualities make XPO one of those top transportation stocks for investors to consider.
American Airlines Group (AAL)
In 2023, American Airlines Group (NASDAQ:AAL) reported a strong reduction in total debt, approximately $10.9 billion from its peak levels in 2021, aligning with its goal of reducing total debt by $15 billion by the end of 2025. That debt reduction was highlighted by a proactive decrease in 2025 maturities by $2.3 billion.
Meanwhile, for the future, AAL outlined its financial and operational guidance for 2024, projecting an adjusted loss per diluted share between -$0.15 and -$0.35 for the first quarter. For the full year, it expects adjusted earnings per diluted share to be between $2.25 and $3.25.
Now could be a good time to pick up shares of AAL as Wall Street’s consensus also mirrors AAL management’s forecasts. It has a rating of Buy, with a predicted 21.68% upside for its stock price.
FedEx (FDX)
FedEx (NYSE:FDX) has projected a flat to low-single-digit-percent revenue growth year over year, with earnings per diluted share estimated between $15 to $17 before specific accounting adjustments.
While FDX’s projection may sound unimpressive, it’s important to note that the company is focused on improving its diluted EPS for investors. It plans to achieve that through a combination of cost-cutting, stock buybacks and CAPEX aimed at long-term accretion.
For instance, throughout fiscal 2023, FDX returned approximately $2.7 billion to stockholders through stock repurchases and dividend payments. For fiscal 2024, it plans to repurchase $2 billion of its common stock and has announced a 10% increase in its annual dividend rate. Its div yield is currently around 2% at the time of writing.
Sometimes, it pays for a company to take their foot off the gas for a bit while they iron out the operational kinks before diverting focus back to making sales. This appears to be a good strategy for FDX long-term.
Norfolk Southern Corporation (NSC)
Norfolk Southern Corporation (NYSE:NSC) provides transportation of raw materials via its railroad network in the U.S. Its segments include the Norfolk Southern Railway Company and Intermodal.
NSC is another top transportation stock that would work well for investors pursuing a contrarian investment strategy. Its revenues decreased nearly 5% year-over-year in Q4 2023, with an adjusted operating ratio of 68.8%. The adjusted operating income decreased by 19%, and net income and EPS both fell by 19% and 17%, respectively.
The future also paints a challenging outlook for NSC. That includes a 1% to 4% revenue growth from 2023 levels, with management expecting around 3% and specific increases expected in steel shipments and automotive sectors.
Due to the operating segment composition of NSC, demand for its services can gyrate along with the swings of the economy. That, to me, represents a market and not a company-specific issue expected to persist in the future.
Indeed, NSC’s EPS is expected to surge 61.94% in FY2024, along with strengthening its top line. That suggests it could be on the comeback trail.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) anticipates earnings per share in 2024 to range between $6 and $7, with free cash flow projected at $3 to $4 billion. That builds upon the previous year’s revenue achievement of $54.7 billion, a 20% increase over 2022. DAL aims to maintain this momentum with a revenue increase of 3% to 6% in the first quarter of 2024.
DAL is also making an effort to improve its fleet and operations, which could save the company money in the future. The company announced a purchase agreement with Airbus (OTCMKTS:EADSY) for 20 A350-1000s starting in 2026.
It’s not common for Wall Street to come together to predict a huge upside for an airline stock like DAL. But this time, 12 of them did, giving it a Strong Buy consensus rating and a 32.94% predicted upside for its stock price.
I think the best has yet to come for DAL, so it’s one of those top transportation stocks for investors.
United Parcel Service (UPS)
United Parcel Service (NYSE:UPS) has issued guidance that indicates expected revenue to range from approximately $92 billion to $94.5 billion. That forecast falls below the consensus target.
Despite this bearish backdrop, I still think UPS is one of those top transportation stocks for investors to consider closely.
The main thing that UPS has going for it is its strong dividend yield of around 4.4% at the time of writing. That is supported by its robust dividend growth rate of around 5%, and it has consistently paid out and raised dividends.
Furthermore, the stock could be seen as undervalued on some key metrics. For instance, its PE ratio of 19 times earnings and PS ratio of just 1.4 times sales are significantly below the median of its peers.
I think a combination of how cheap the stock is and its dividend makes it one of those top transportation stocks.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.