3 Transportation Stocks That Should Keep Rolling in the Fourth Quarter

Investors follow the news cycle almost to a fault. And right now, the supply chain crisis is on full display. As I write this article, a backload of barges are waiting to be offloaded at two of our nation’s largest ports. This article isn’t the right vehicle to comment on why we got here or how we get out of it.  

However, as an investor, the goal is to make money out of any crisis. And right now, the transportation sector will be a place that savvy investors should be eyeing. This segment is frequently seen as a “boring” sector. But at times like this boring can be beautiful. Transportation stocks fit that description. 

Transportation companies will play an essential role in unwinding the supply chain crisis. A recent Research and Markets report forecasts the global-local general freight trucking market to grow at a CAGR of 12% in 2021. And transportation stocks are also getting a boost as many fleet operators begin the shift towards electrification which is only accelerating as the price of gas rises across the country.  

With that brief introduction, here are three transportation stocks that should deliver strong growth for the rest of the year. 

United Parcel Service (NYSE: UPS) - UPS stock is “only” up 15% in 2021. Some of the shine has come off this pandemic winner that saw its stock rise approximately 80% from the beginning of the pandemic until the end of 2020. However, UPS has contracts with many of the top e-commerce names which should be sufficient to keep the company posting strong revenue numbers. 

And earlier this year, the company announced an agreement with Arrival to purchase 10,000 electric vehicles for use in last-mile delivery. Aside from helping the company combat higher fuel costs, this move could be seen as another salvo in the company’s dispute with the United States Postal Service that is turning to package delivery as a way of combating declining mail volume. However, the postal service is only making plans to convert 10% of its fleet to electric vehicles. 

UPS stock is starting to look overbought although it is benefiting from a couple of bullish analysts reports. The company reports earnings in late October which is always a time of share price movement. UPS is the top stock on MarketBeat’s list of 100 Transportation Stocks.  

Knight-Swift Transportation (NYSE: KNX) - There are several trucking companies that could have made this short list of three stocks. I would give a look to Knight-Swift Transporation. The company has three divisions: a trucking division, a logistics division, and an intermodal division.The stock still appears to be a good value. It’s priced at a P/E ratio of 15.52, which is less than half the average of the S&P 500 Index as of September 24, 2021.  

The stock is down 4% in the last month, but is up 20% for the year. The company reports earnings on October 20 and could be ready for a significant move higher according to the opinion of analysts. Currently, the stock is bumping against a level of resistance at its 50-day simple moving average.  

Of the three stocks on this list, Knight-Swift is the lowest rank among the MarketBeat list of 100 Transportation Stocks, coming in at number 25. 

Canadian Pacific (NYSE: CP) - Another company reporting earnings on October 20 is Canada’s largest rail service. The company operates out of 11 ports and has 13,000 miles of track that reach across the U.S. border states. One reason that the stock merits consideration is that the company faces significantly less competition than rail providers in the United States. 

Revenue is expected to come in at $1.67 billion and increase to $1.75 in the next quarter. An even brighter story looks to be on tap for earnings which are expected to grow an average of 9.6% over the next five years. CP stock is also starting to see heavy interest from institutional investors which can be a bullish sign. That may be a reason that analysts project the stock to have a 25% upside from current levels. CP is the seventh-ranked stock on MarketBeat’s list of 100 Transportation Stocks.