3 Transportation Stocks to Buy Now: June 2024

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The transportation industry is one that will always exist, and there will never be a time when it will not grow. People are always looking to travel more efficiently, and the push for innovation will continue. Transportation stocks are the types that investors can feel comfortable to buy now for the long term. The global transportation services market, valued at $7.31 trillion in 2022, is expected to double to around $15.94 trillion by 2032, reflecting a robust CAGR of 8.11%. The transportation industry has seen challenges this year regarding supply chains, as auto production has been delayed and freight has been paused due to labor shortages. 

However, the companies I recommend below have healthy financials and the potential to dominate their respective markets. They have consistently shown financial performance despite the macroeconomic headwinds facing them. Lets take a look at three of the best transportation stocks to buy now.

Ford Motor Company (F)

Ford dealership sign against a blue sky.

Source: D K Grove / Shutterstock.com

Ford Motor Company (NYSE:F) is one of the largest U.S. automakers, and was the first to mass-produce vehicles.

The company’s stock is down 2.55% year-to-date (YTD) as its losses have widened due to the price war in the EV market. In addition, Ford has faced shipments delays. 

However, Ford reported $42.8 billion in revenue for Q1 2024, a 3% increase year-over-year (YOY) despite fewer shipments. The Ford Pro segment outperformed by growing over 36% YOY to $18 billion. In addition, it saw its software subscriptions growing 43% YOY. 

Ford’s famous brand, primarily the F-150, is the equivalent of Apple’s (NASDAQ:AAPL) iPhone. Its popularity helps Ford grow even during tough times for the company. In addition, its rapid growth of software subscriptions represents a new revenue stream and promises higher margins compared to its labor-intensive manufacturing business. 

Uber Technology (UBER)

Uber sign on its headquarters building in San Francisco, California, USA - June 6, 2023. Uber Technologies is a transportation conglomerate.

Source: JHVEPhoto / Shutterstock.com

From a simple ride-share application, Uber Technology (NYSE:UBER) has expanded to food delivery and freight transportation. Its stock is up over 20% YTD due to strong revenue growth and increased profitability. 

In Q1 2024 its revenue increased by 15% YOY to $10.13 billion. It showed strong profitability as adjusted EBITDA increased by 82% to $1.3 billion. It’s generating strong cash flow for investors, with free cash flow multiplying from $986 million to $4.17 billion in just a year. 

One of the critical catalysts is Uber’s partnership with Instacart (NASDAQ:CART), which allows Uber’s deliveries to compete in the grocery delivery market. The U.S. market is expected to be worth $65.51 billion in 2031 and grow at a 9.31% CAGR from 2024. This partnership gives Uber at least 21.6% market share, just below Walmart (NYSE:WMT) and Amazon.com (NASDAQ:AMZN). With Uber’s large base of existing delivery drivers, the partnership makes Uber a formidable competitor in a fast-growing market. 

Union Pacific Corp (UNP)

United Pacific (UNP) switch on tracks near Kansas City.

Source: Michael Rosebrock / Shutterstock.com

Union Pacific Corp (NYSE:UNP) is a major owner of freight railroads in America. They are vital to the U.S. economy and move one third of all U.S. exports. Its stock is down over 9% this year due to decreased coal shipments and a soft economy. 

Union Pacific Corp maintains a strong position in the U.S. freight industry with a 34.94% market share. The company pioneers itself as the second largest railroad in the U.S., sharing a duopoly with Burlington Northern Santa Fe Corporation. This has helped Union Pacific maintain its revenues and margins to outperform the rest of the sector. 

Operating income for Q1 2024 was $2.4 billion, up 3% YOY. Revenue declined by 1%, and net income increased by 1% YOY. Overall, despite headwinds, management has been strong in maintaining its financials. 

Union Pacific Corp plans to invest $3.4 billion to upgrade its older trains to improve efficiency, maintain infrastructure and expand to newer high-growth areas. As a company with such a rich history and assets of rail networks, it’s stock drop this year could mean it’s an opportunity. 

On the date of publication, Michael Que 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.

The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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