Transportation companies are vital to our everyday economy. They allow for the shipment of goods globally and domestic and international passenger and cargo air travel.
Transportation stocks are an important addition to any investor’s portfolio for diversification purposes. They are also a thriving industry poised for sustained growth.
These are a few transportation companies for which I have received a strong buy rating due to their selectively low forward P/E ratio compared to their sector average. Also, they have all performed remarkably well financially within the last year, as represented by share price growth.
Ryder System (R)
Ryder System (NYSE:R) is a logistics company that provides leasing and rental services for trucks, vans, and trailers. Ryder also offers order fulfillment, freight brokerage, and transportation management services.
Over this past year, its share price has risen by 58% due to solid financials and a robust leasing model.
On April 23, Ryder announced its earnings for the first quarter of 2024, and it stated that total revenue increased by 5% and earnings per share fell by 24% to two dollars and fourteen cents per share year-over-year. The drop in earnings per share was partially due to a weaker market environment for used and rental vehicle sales. Ryder also provided a full-year forecast for 2024, with operating revenue predicted to rise by 10%. And a 15.5% to 16.5% return on equity.
It offers investors a robust dividend yield of 2.27% on an annual basis. Its most recent distribution to investors was $0.71 per share.
Ryder Systems meets a strong buy rating due to its improving financial performance and the fact that it still offers investors a solid value pick. Its forward P/E ratio is 10.58, while the sector average is 19.25.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) is a regional airline with a fleet of over 500 airplanes that offers passenger and cargo transport services, aircraft leasing, and on-demand charters.
Over the past year, its share price has risen by 172%, which outpaces all other passenger airline companies by a wide margin. Its above-average performance is due to increased earnings growth, partnerships, and a growing demand for travel.
On April 25, SkyWest reported earnings for the first quarter of 2024, stating that total operating revenue increased by 16% year-over-year. SkyWest reported a net loss of $22 million for Q1 2023, which increased to a net income of $60 million for Q1 2024.
SkyWest also partners with several major airlines, such as Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), and Alaska Air Group (NYSE:ALK), to supply them with E175 aircraft through 2026.
SkyWest is still a strong buy for investors. Despite its considerable growth over the last year, it is trading at a great valuation. Its forward P/E ratio is 11.29, while the sector average is 19.25. With its growing travel demand anticipated to continue, SkyWest still has room to grow.
Costamare (CMRE)
Costamare (NYSE:CMRE) is a marine transportation company that operates a fleet of approximately 100 containerships and dry bulk vessels.
Its share price has risen by 67% within the last year, primarily due to its consistent earnings growth recently.
On May 10, Costamare released its earnings for the first quarter of 2024, stating that voyage revenue increased by 89% and adjusted earnings per share rose by 66% to $0.63 year-over-year.
Costamare also stated that its total liquidity was approximately 1.1 billion for the first quarter. In Q1 2024, it approved over 30 charter agreements among its dry bulk vessels.
CMRE offers investors a dividend ratio of 3.28%. Its most recent quarterly dividend was $0.12 per share, distributed on May 6.
Costamare’s strong liquidity position and profitable leasing program have helped draw investors into purchasing shares. It is trading at a decent value for investors, which makes it a strong buy option within the transportation sector. Its forward P/E ratio is 4.70, while the average for the sector as a whole is much higher at 19.42.
As of this writing, Noah Bolton did not hold (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.
