The Zacks Analyst Blog Highlights: United Airlines, United Parcel Service, Landstar System, Canadian Pacific Railway and Werner Enterprises
For Immediate Release
Chicago, IL – August 21, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: United Airlines Holdings, Inc. UAL, United Parcel Service, Inc. UPS, Landstar System, Inc. LSTR, Canadian Pacific Railway Limited CP and Werner Enterprises, Inc. WERN.
Here are highlights from Thursday’s Analyst Blog:
4 Transportation Stocks to Buy Amid Green Shoots of Recovery
It is no secret that the stocks belonging to the widely-diversified transportation sector have been dealt a body blow by the coronavirus pandemic. The space, which encompasses airlines, railroads, truckers, shippers and package delivery companies to name a few, has been shaken up by the extensive travel restrictions imposed to break the chain of this highly contagious disease.
Headwinds Affecting the Sector
Within the transportation sector, airline stocks have been the worst-hit due to the sharp drop in passenger revenues. Due to shrinking top lines, heavyweight airlines like Delta Air Lines and United Airlines incurred losses in the June quarter.
Railroads have also been hurt by the declining overall volumes as supply-chain disruptions due to the pandemic crippled the shipment of goods not only across the United States but also globally. The worldwide health emergency also spelled doom for the shipping industry, which is responsible for transporting the majority of goods involved in the world trade, which took a severe hit. As a result, multiple sailings are being canceled and vessels, rapidly idled.
Some Bright Spots to Take Note of
Despite the above-mentioned downsides, there are a few favorable factors prevalent in this sector. The surge in e-commerce demand during the current scenario is one such tailwind. As a result of the pandemic, people are mostly staying indoors and avoiding venturing out unless absolutely necessary, despite the easing of restrictions. Evidently, e-commerce — the method of buying and selling goods and services via a software platform — is gaining further momentum as the need for door-to-door delivery of essentials during this unprecedented crisis is rising.
Notably, United Parcel Service, a package delivery company, outperformed in the June quarter on the back of expanded residential delivery volumes amid the rampant coronavirus outbreak that confined people to their homes. Notably, business-to-consumer shipments soared 65.2% year over year. Also, railroads despite dwindling volumes are being aided by the cost-cutting measures and increased efficiencies, courtesy of the precision scheduled railroading model. Similarly, despite being battered by passenger-revenue softness, the focus of airlines on operating cargo-only flights is praiseworthy. Evidently, cargo revenues surged 36.3% at United Airlines in the June quarter.
Signs of Recovery Ease Pressure
The fact that the Zacks Transportation sector has appreciated 10.9% in the past month, outperforming the S&P 500 Index’s 3.6% gain in the same period is indicative of the coronavirus-scarred sector being on the mend.
Some recent developments also point to the fact that things are starting to look better for the sector participants. Recently, the State Department removed the warning on U.S. citizens against traveling abroad, thereby boosting travel-focused stocks like airlines.
Moreover, according to the latest Cass Freight Shipments Index report, shipment volumes improved 4.8% in July from the June levels, thus driving the trucking stocks particularly in the sector. Also, per data released by ACI Worldwide, e- commerce transactions across the globe rose 19% in July on a year-over-year basis.
Transportation Stocks That Should Grace Your Portfolio
In view of the above-mentioned upsides, we believe, transportation stocks currently boast attractive investment opportunities. We thus selected four stocks that currently carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and have bullish current-year earnings estimate revisions despite the pandemic-related woes. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our first pick is the Atlanta-based UPS. The stock presently sporting a Zacks Rank of 1 is flying high on the back of e-commerce driven surge in residential delivery volumes. The Zacks Consensus Estimate for current-year earnings has been revised 20.4% upward over the past 60 days.
Our next choice is Landstar System, an asset-light provider of integrated transportation management solutions. The recent improvement in shipment volumes is a positive for this Jacksonville, FL-based currently Zacks Rank #2 trucking company. The Zacks Consensus Estimate for current-year earnings has been moved 2.8% north over the past 60 days.
The Calgary, Canada-based railroad operator Canadian Pacific Railway Limited also features on our list. This presently Zacks #2 Ranked company is being aided by factors like upbeat Canadian grain movement and low costs. The Zacks Consensus Estimate for current-year earnings has been raised 7.2% over the past 60 days.
Our final choice is another trucking company Werner Enterprises, which is domiciled in Omaha, NE. This currently #2 Ranked company is benefiting from factors like cost-control measures and an uptick in shipment volumes. The Zacks Consensus Estimate for current-year earnings has been revised 15.5% upward over the past 60 days.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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