3 Transportation Stocks to Buy Before 2022

This year’s holiday season is expected to contrast with last year’s debilitated transportation industry. According to AAA  more than 109 million Americans are predicted to travel between December 23, 2021, and January 2, 2022. This is expected to drive transportation industry sales in the near term. And investors’ interest in the transportation space is evidenced by the SPDR S&P Transportation ETF’s (XTN) 5.5% gains over the past three months.

Furthermore, the growing freight demand is expected to boost the transportation industry’s growth. According to ReportLinker, the global public transportation market is poised to grow at a CAGR of almost 6% during 2021-2025.

Given this backdrop, we think it could be wise to bet on fundamentally strong transportation stocks J.B. Hunt Transport Services, Inc. (JBHT), Landstar System, Inc. (LSTR), and Ryder System, Inc. (R).

J.B. Hunt Transport Services, Inc. (JBHT)

JBHT in Lowell, Ark., provides surface transportation and delivery services in North America. It operates through five segments: Intermodal (JBI); Dedicated Contract Services (DCS); Integrated Capacity Solutions (ICS); Final Mile Services (FMS), and Truckload (JBT).

On November 19, JBHT announced the launch of a new transload service to assist shippers in the New York metro area that are experiencing nationwide congestion. Shelley Simpson, chief commercial officer and  executive vice president of people and human resources at JBHT, said, “Our new transloading service will help customers accelerate freight movement and improve container fluidity.”

JBHT’s total operating revenues increased 27.2% year-over-year to $3.14 billion for its fiscal third quarter, ended September 30, 2021. Its net earnings came in at $199.83 million, up 59.2% year-over-year. Also, its EPS increased 59.3% year-over-year to $1.88.

Analysts expect JBHT’s revenue and EPS to increase 24% and 44.1%, respectively, year-over-year to $11.95 billion and $6.83 for its fiscal 2021. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 23% in price to close yesterday’s trading session at $198.60.

JBHT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

JBHT has a B grade for Momentum and Sentiment. Within the Trucking Freight industry, it is ranked #11 out of 22 stocks. Click here to see the additional POWR Ratings for Growth, Value, Stability, and Quality for JBHT.

Landstar System, Inc. (LSTR)

LSTR provides integrated transportation management solutions in the United States, Canada, Mexico, and internationally. The Jacksonville, Fla.-based company operates through two segments: Transportation Logistics and Insurance.

On October 20, LSTR President and CEO Jim Gattoni said, “As we look to the 2021 fourth quarter, we anticipate continued solid performance on the expectation that broad-based economic strength will support a strong freight environment for the near future. In addition, we will likely continue to be in a capacity-constrained environment, which should continue to support elevated truck revenue per load in the fourth quarter.”

LSTR’s revenue increased 59.8% year-over-year to $1.73 billion for the third quarter, ended September 25, 2021. Its net income came in at $98.67 million, up 59.4% year-over-year, and its EPS was  $2.58, up 60.2% year-over-year.

For its fiscal year 2021, LSTR’s revenue and EPS are expected to grow 54.1% and 83.4%, respectively, year-over-year to $6.37 billion and $9.7. It surpassed the consensus EPS estimates in each  of the trailing four quarters. Over the past nine months, the stock has gained 5.9% in price to close yesterday’s trading session at $176.02.

LSTR’s strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equals a Buy in our proprietary rating system. In addition, it has a B grade for Growth, Momentum, and Quality.

LSTR is ranked #10 in the Trucking Freight industry. Click here to see the additional POWR Ratings for LSTR (Value, Stability, and Sentiment).

Ryder System, Inc. (R)

R operates as a logistics and transportation company worldwide. The Miami, Fla.-based company operates through three segments: Fleet Management Solutions (FMS); Supply Chain Solutions (SCS); and Dedicated Transportation Solutions (DTS).

On December 13, R agreed to acquire Whiplash, a leading national omnichannel fulfillment and logistics services provider, for approximately $480 million in cash. Robert Sanchez, chairman, and CEO, R, said, “The acquisition of Whiplash is consistent with our strategy to accelerate growth in our higher-return supply chain business. It also expands our e-commerce and omnichannel fulfillment network and reflects our continued focus on technology and innovation.”

For its fiscal third quarter, ended September 30, 2021, R’s total revenues increased 14.3% year-over-year to $2.46 billion. The company’s net earnings came in at $138.10 million, up 285.8% year-over-year, and its EPS from continuing operations was  $2.58, up 203.5% year-over-year.

R’s revenue is expected to be $9.55 billion in its fiscal year 2021, representing a 13.4% year-over-year rise. The company’s EPS is expected to grow  3,225.9% in the current year to $8.44. Also, it surpassed the Street’s EPS estimates in three of its four trailing quarters. Over the past nine months, the stock has gained 4.5% in price to close yesterday’s trading session at $80.33.

It is no surprise that R has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. In addition, it has an A grade for Growth and a B grade for Value, Momentum, and Quality.

R is ranked #7 of 88 stocks in the Industrial - Services industry. Click here to see the additional POWR Rating for R (Stability and Sentiment).

Click here to check out our Industrial Sector Report for 2021

JBHT shares were trading at $200.20 per share on Thursday morning, up $1.60 (+0.81%). Year-to-date, JBHT has gained 47.55%, versus a 26.97% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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