3 Transportation Stocks to Buy as Supply Chain Issues Continue
Because the transportation industry plays a significant role in the supply chain systems of several businesses, it is witnessing massive demand amid the current supply chain crisis. And because the...
Because the transportation industry plays a significant role in the supply chain systems of several businesses, it is witnessing massive demand amid the current supply chain crisis. And because the forthcoming holiday season is expected to increase the demand for transportation significantly, we think it could be wise to bet on quality transportation stocks Schneider National (SNDR), Daseke (DSKE), and USA Truck (USAK). Read on.
Supply chain disruptions have caused shortages of goods ranging from household items to automobile parts, not just across the United States but worldwide. The COVID-19 pandemic has wreaked havoc on global supply chains because safety restrictions reduced the production of goods and services. But rising demand with the reopening of the economies and supply shortages have driven up the prices of goods and commodities.
Last week, Federal Reserve chair Jerome Powell said that the global supply chain issues could remain through 2022. Against this backdrop, shares of transportation companies, such as shipping and trucking operators, have been attracting heightened investor attention because these companies are playing a vital role in addressing the supply disruptions. Investors’ interest in transportation stocks is evidenced by the iShares Transportation Average ETF’s (IYT) 8.8% returns over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 3.5% gains.
So, as the demand for transportation services continues to rise amid the supply chain crisis, prominent players in this space Schneider National, Inc. (SNDR), Daseke, Inc. (DSKE), and USA Truck, Inc. (USAK) are expected to deliver significant returns to investors. Therefore, we think it could be wise to scoop up their shares now.
Schneider National, Inc. (SNDR)
Green Bay, Wis.-based surface transportation and logistics solutions company SNDR provides truckload, intermodal, and logistics services in North America. It operates in Truckload; Intermodal; and Logistics segments. It also leases equipment, such as trucks to owner-operators, and provides insurance for company drivers and owner-operators.
On July 19, 2021, SNDR announced plans to build ‘The Grove,’ an innovation center, at its main complex in Ashwaubenon, Wisconsin. SNDR’s President and CEO, Mark Rourke, said, “The Grove is not only an investment in Schneider but also the community, it is a representation of our commitment, willingness and capability to continue to adapt, change and thrive.”
SNDR’s operating revenues rose 32% year-over-year to $1.36 billion in the second quarter, ended June 30, 2021. The company’s adjusted income from operations grew 98% year-over-year to $125.80 million, while its adjusted net income came in at $106.50 million, representing a 128% year-over-year rise. Also, its adjusted EPS was $0.60, up 131% year-over-year.
Analysts expect SNDR’s revenue and EPS to increase 19.5% and 58.4%, respectively, year-over-year to $5.44 billion and $1.98 in its fiscal year 2021. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 19.7% in price year-to-date to close Friday’s trading session at $12.92.
SNDR’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 are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
SNDR has a B grade for Growth, Value, Momentum, and Sentiment. Within the A-rated Trucking Freight industry, it is ranked #3 of 22 stocks. Click here to see the additional POWR ratings for Stability and Quality for SNDR.
Note that SNDR is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Daseke, Inc. (DSKE)
DSKE in Addison, Tex., is the largest flatbed and specialized transportation and logistics company in North America, operating through two segments--flatbed solutions and specialized solutions. The company transports aircraft parts, manufacturing equipment, structural steel, ammunition, and explosives. It also offers logistical planning and warehousing services.
On October 22, 2021, DSKE’s CEO Jonathan Shepko said, “Prospectively, we plan to deliver meaningful value to our shareholders by continuing to leverage our scale and our differentiated capabilities, while also maintaining a keen focus on advancing our operational improvement initiatives."
DSKE’s reported revenues were $424.60 million for the third quarter, ended September 30, 2021, up 13% year-over-year. The company’s adjusted EBITDA grew 21.7% year-over-year to $68.40 million, while its adjusted net income came in at $30.10 million, representing a 70% year-over-year increase. Also, its EPS came in at $0.30, up 76.5% year-over-year.
For its fiscal year 2021, analysts expect DSKE’s revenue and EPS to increase 6.4% and 3,800%, respectively, year-over-year to $1.55 billion and $0.78. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has gained 69.4% in price year-to-date to close Friday’s trading session at $12.92.
DSKE’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR rating system. It has a B grade for Growth, Value, and Momentum.
Note that DSKE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
USA Truck, Inc. (USAK)
USAK is a leading capacity solutions provider which operates as a truckload carrier. The Van Buren, Ark., company It operates through two segments: trucking; and USAT logistics. The trucking segments offer truckload motor carrier services and freight services; and its USAT Logistics segment provides freight brokerage, logistics, and intermodal rail services.
On September 29, 2021, the leading trade magazine Inbound Logistics named USAK in its Top 100 Truckers list for 2021. USAK’s President and CEO, James Reed, said, “We are performing in these challenging times with robust capabilities for freight management through our superior technologies. Our capability to operate in this market environment is serving our customers’ supply chain operations.”
For the quarter ended June 30, 2021, USAK’s consolidated operating revenue came in at $170.03 million, up 37.4% year-over-year. The company’s adjusted EBITDA grew 5.5% year-over-year to $16.62 million, while its adjusted net income came in at $4.43 million compared to a $513,000 loss of $513,000 in the prior year. Also, its adjusted EPS came in at $0.50 compared to a $0.06 loss per share in the year-ago period.
Analysts expect USAK’s revenue to increase 25.20% year-over-year to $690 million in its fiscal year 2021. Similarly, its EPS is expected to grow 197.1% year-over-year to $2.02 in the current year. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 108.5% in price year-to-date to close Friday’s trading session at $18.62.
USAK has an overall POWR Rating of B, equating to a Buy in our proprietary rating system. It has an A grade for Value, and a B grade for Growth and Momentum.
Click here to see the additional POWR ratings for USAK (Stability, Sentiment, and Quality). USAK is ranked #6 in the Trucking Freight industry.
Note that USAK is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
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SNDR shares were trading at $24.97 per share on Monday morning, up $0.20 (+0.81%). Year-to-date, SNDR has gained 21.71%, versus a 22.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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