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5 Transportation Stocks That More Than Doubled in 2021

Stocks like ArcBest (ARCB), Danaos (DAC), USA Truck (USAK), Genco Shipping &Trading (GNK) and Eagle Bulk Shipping (EGLE) gain in excess of 100% year to date.

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This story originally appeared on Zacks

Most corners of the widely-diversified transportation sector were battered in 2020. However, with the gradual resumption of economic activities, transportation stocks had a much better run on the bourses in 2021. Evidently, the Zacks Transportation sector has gained 8.8% so far this year.

- Zacks

Zacks Investment ResearchImage Source: Zacks Investment Research

Driven by this rosy scenario, stocks like ArcBest ARCB, Danaos Corporation DAC, USA Truck USAK, Genco Shipping & Trading GNK and Eagle Bulk Shipping EGLE have displayed an impressive share performance this year so far.

Let’s take an in-depth look at the factors that worked in favor of the transportation stocks this year.

The reopening of and the subsequent uptick in economic activities is primarily attributable to the extensive global vaccination programs, which instilled confidence in people to go out without the fear of getting infected.

The improving freight scenario in the United States, driven by the betterment of economic conditions this year, aided various channels of the transportation sector like railroads and truck operators. In fact, the freight environment in the United States became quite bright, riding on the improved economic conditions. 

Per a Cass Freight Shipments Index report for November, shipment volumes climbed 4.5% from the year-ago levels. The reading compared favorably with the 0.8% year-over-year increase recorded in October. Shipment volumes increased in each of the first 11 months of 2021 on a year-over-year basis.

Trucking stocks also gained this year owing to overall economic growth. This hints at the increased movement of goods to more and more customers. Led by economic growth in the United States, the trucking industry is benefiting from a continued improvement in freight demand.

Shipping stocks also benefited this year, courtesy of the ramped-up economic activity that boosted the demand uptick. Improvement in trade volumes represents a huge positive for the shipping stocks as those are responsible for transporting the bulk of goods involved in world trade.

Airlines in the transportation sector are also gaining from increased air-travel demand. The substantial air traffic during the Thanksgiving holiday period last month is indicative of people resorting to air travel again.

Our Choices

In view of the above tailwinds, we believe that transportation stocks should grace an investor’s portfolio, currently. We narrowed our search to five transportation stocks that more than doubled in 2021. These stocks have a strong potential for 2022 and have seen upward earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks year to date.

Zacks Investment ResearchImage Source: Zacks Investment Research

ArcBest Corporation is currently Zacks #1 Ranked. ARCB’s earnings trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 27.4%. The Zacks Consensus Estimate for ARCB’s 2022 earnings has been revised 26.3% upward in the past 60 days.

Shares of ArcBest have skyrocketed 185.5% so far this year. Improving freight conditions in the United States bode well for ARCB. Solid customer demand and higher market rates are supporting ARCB.

Athens, Greece-based Danaos Corporation is benefiting from an expanded fleet and higher charter rates. Efforts to reduce the debt levels also bode well for DAC.

The stock has gained a massive 231.4% year to date. Currently, sporting a Zacks Rank #1, Danaos has seen the Zacks Consensus Estimate for 2022 earnings being revised 6.6% upward over the past 60 days.

USA Truck operates in the continental United States, and parts of Canada and Mexico. Apart from improved freight demand, transformation of the Trucking segment through regionalization, optimization, pricing discipline, and a focus on safety and cost control, are driving USAK’s performance. The stock currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for USA Truck’s next-year earnings has been revised 15.6% northward in the past 60 days. Shares of USAK have gained 119.2% so far this year.

New York-based Genco Shipping & Trading Limited currently flaunts a Zacks Rank of 1. Optimism surrounding the dry bulk market is a huge boon for Genco Shipping. Increased fleet utilization with the gradual reopening of the economy and an upturn in world trade are also aiding GNK.

On the back of the aforementioned tailwinds, shares of Genco Shipping, which is focused on the seaborne transportation of commodities across the globe, have skyrocketed 110.3% so far this year. The stock has also seen the Zacks Consensus Estimate for next-year earnings move 6.9% north over the past 60 days.

Headquartered in Stamford, CT, Eagle Bulk Shipping is currently Zacks #1 Ranked. Like Genco Shipping, EGLE is gaining from the bullishness surrounding the dry bulk market as economic activities gradually gather steam.

Buoyed by this upbeat scenario, shares of this biggest U.S-based owner of Handymax dry bulk vessels, have had a dream run on the bourses, skyrocketing 135.9% year to date. The stock has also seen the Zacks Consensus Estimate for 2022 earnings move 9.9% north over the past 60 days.



Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?

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Genco Shipping & Trading Limited (GNK): Free Stock Analysis Report

 

Eagle Bulk Shipping Inc. (EGLE): Free Stock Analysis Report

 

Danaos Corporation (DAC): Free Stock Analysis Report

 

ArcBest Corporation (ARCB): Free Stock Analysis Report

 

USA Truck, Inc. (USAK): Free Stock Analysis Report

 

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