The transportation industry is big business and generates billions upon billions of dollars annually. The movement of people and goods via planes, trains and automobiles is increasingly complicated and sophisticated in our global, interconnected world. And many companies are growing and innovating in surprising ways to become more efficient, retain a competitive edge, and adapt to the new world order. From electric vehicles (EVs) and long-range transcontinental aircraft to drones and flying cars, the transportation industry is evolving at a fast clip. Investors should pay attention to what’s taking place in transportation so that they can capitalize on the latest trends and opportunities. Here are seven transportation stocks that are changing the way we move.
Tesla (TSLA)
Tesla’s (NASDAQ:TSLA) third-quarter financial results are out and it’s an ugly print. The EV maker’s stock is down 10% after it missed Wall Street’s expectations across the board. The company led by Elon Musk announced EPS of 66 cents and revenue of $23.4 billion. Analysts had been calling for a profit of 70 cents a share and sales of $23.9 billion. The company’s EPS was down 37% from the same quarter of 2022. Tesla also reported that its gross profit margin was 16.3% in Q3, below the 17.5% that was expected.
During an an earnings call with analysts and media, Tesla executives indicated that the price cuts made throughout this year are likely to continue as it tries to boost sales. The average price of a Tesla is now $10,000 lower than it was a year ago. So why did it make the list of transportation stocks to own? While the Q3 print was disappointing, Musk reiterated that Tesla expects to ship 1.8 million EVs this year, and the highly anticipated Cybertruck is still on track to begin deliveries by year’s end.
Thus, you don’t want to count out TSLA stock. It’s risen more than 1,000% over the last five years. The current selloff could be a buying opportunity.
Ferrari (RACE)
Italian sports car manufacturer Ferrari (NYSE:RACE) is known as an innovative and lucrative company among transportation stocks. Now, Ferrari is taking its focus on innovation to a new level with the announcement that it will accept cryptocurrencies as payment for its vehicles sold within the U.S. The move to accept crypto as payment for its high-end luxury cars comes after repeated requests from the company’s wealthy clientele. Ferrari has turned to BitPay, one of the biggest crypto payment processors, and will allow transactions in Bitcoin (BTC-USD), Ethereum (ETH-USD) and USDC (USDC-USD), one of the largest stablecoins.
BitPay will turn crypto payments into traditional currency on behalf of Ferrari’s dealers, so they are protected from price swings. Ferrari isn’t the first automaker to experiment with crypto as a form of payment. In 2021, Tesla briefly accepted payment in Bitcoin before chief executive Elon Musk stopped the practice over environmental concerns. Ferrari, which sold 13,200 cars in 2022 with prices starting at $211,000, plans to extend crypto payments to Europe in the first quarter of 2024. RACE stock is up 40% this year and has gained 158% over five years.
American Airlines (AAL)
As the world’s largest carrier, American Airlines (NASDAQ:AAL) is important to pay attention to as far as transportation stocks go. The company just posted its Q3 results, and they showed a loss of $545 million, or 83 cents a share, which was down from a profit of $483 million, or 69 cents a share, a year earlier. American also lowered its profit forecast for the remainder of this year, saying it now expects to earn between $2.25 and $2.50 a share for all of this year. The new guidance is below previous forecasts but still in line with analysts’ consensus expectations.
Revenue in Q3 came in at $13.48 billion versus $13.52 billion that was the consensus expectation of analysts who cover the airline. The airline blamed the poor results on higher fuel prices and an expensive new labor agreement it signed with its pilots’ union. In August of this year, American signed a new contract with its 15,000 pilots that provides them with more than $9 billion of additional compensation and benefits. At the same time, the price of crude oil is back near $90 a barrel. Fuel prices are one of American Airlines’ biggest expenses.
Despite the Q3 loss, AAL stock rose nearly 1%. So far this year, the company’s share price has declined 10%.
Toyota Motor Co. (TM)
After years of stalling and focusing on hybrids, Toyota Motor Corp. (NYSE:TM) has finally gotten serious about EVs. In June of this years, the Japanese automaker announced a full line-up of EVs and plans to manufacture the next generation of batteries that will power them. Toyota is making its EVs and batteries through a new business unit called “BEV Factory” that it has created. The automaker is aiming for a driving range of 1,000 kilometers for all its future EVs, and plans to produce 1.7 million vehicles a year by 2030.
Toyota has been undergoing a shift to prioritize EVs under new CEO Koji Sato, who took over the company in April of this year. Toyota is also developing a method for mass producing solid-state batteries for its EVs and aims to commercialize the technology by 2028. Known for the quality of its vehicles, Toyota remains the world’s top-selling automaker. TM stock has gained 26% so far this year, with most of that increase coming since the company unveiled its EV strategy in June.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) has been surging ahead lately. The carrier recently reported that its profit during Q3 of this year rose nearly 60% as strong travel demand continued throughout the summer months. Delta said that it benefitted in Q3 from international trips taken aboard its cutting-edge long-range aircraft. The airline reported EPS of $2.03 versus $1.95 that was forecast by Wall Street analysts. Revenue in the quarter totaled $14.55 billion compared to $14.56 billion that had been expected. The company’s revenue was up 13% year-over-year.
Delta and other U.S. airlines are seeing growth in overseas trips, with trans-Atlantic flights extremely strong. Delta said that revenue generated from international flights rose 34% from last year in Q3. The carrier also said that it has seen a sharp increase in demand for premium seats such as business class. Delta forecasts full-year earnings toward the low end of an earlier estimate, citing an increase in fuel prices. The company expects full-year earnings of $6 to $6.25 a share. The carrier still expects solid travel demand through year’s end.
DAL stock is flat this year, having increased only 0.31% since January. The stock looks cheap right now, trading at only six times future earnings.
Ford Motor Co. (F)
Admittedly, Ford Motor Co. (NYSE:F) is having a difficult time right now among stronger transportation stocks. The United Auto Workers (UAW) recently expanded its strike action against Ford, with unionized workers walking off the job at the automaker’s Kentucky truck plant. That move by the UAW hurts as the Kentucky facility is Ford’s largest manufacturing plant in the world with nearly 9,000 workers onsite. The truck facility generates $25 billion in annual sales for the company and is where it makes the popular F-series pick-up trucks and Ford Expedition sport utility vehicle.
While the current strike by autoworkers is problematic, it shouldn’t deter Ford from its long-term goal of innovating and becoming the world’s top EV manufacturer. The company has committed to spend $50 billion on its EV transition. Like Toyota, Ford is also investing heavily in developing its own batteries to power its EVs, allocating $3.5 billion to a new battery plant in its home state of Michigan. F stock is down 1% this year and its share price has weathered the current UAW strike better than many analysts expected.
United Airlines (UAL)
United Airlines (NASDAQ:UAL) is in growth mode and is last, but certainly not least, on the list of transportation stocks to consider adding to your portfolio. The carrier has ordered 110 new aircraft as it expands its fleet amid a post-pandemic travel surge. The Chicago-based carrier said it has ordered 50 Boeing 787-9 aircraft to be delivered between 2028 and 2031, and 60 Airbus A321neos for delivery between 2028 and 2030. The company also signed options for up to 50 more Boeing 787s and purchase rights for an additional 40 Airbus A321neo aircraft by the end of this decade.
Including the latest order, United Airlines now expects to take delivery of about 800 new narrow body and widebody aircraft by 2032. The carrier said it placed the big order as it tries to take advantage of “growing flying opportunities.” The company is flying high after issuing a string of quarterly results that beat Wall Street forecasts. For this year’s second quarter, United’s profit tripled from a year ago. The just released Q3 results were an across the board beat, though the company lowered its guidance as trips to the Middle East are likely to decline.
UAL stock is down 3% on the year and looks cheap trading at just four times forward earnings estimates.
On the date of publication, Joel Baglole 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.
