Rapid urbanization and surging global trade have resulted in a strong need for efficient transportation, shipping, and freight services. Such market dynamics are opening lucrative opportunities for the transportation industry. Further, technologies and solutions like EVs and AI are enhancing operational efficiency.

Given the industry tailwinds, it could be wise to invest in fundamentally sound transportation stocks FedEx Corporation (FDX), Matson, Inc. (MATX), and Teekay Corporation Ltd. (TK) for potential gains.

The industry is vital in today’s operations as it facilitates transportation, logistics, and shipping services across the globe and contributes to the global economy. Various significant processes and operations rely heavily on the transportation industry in an economy for the movement of people and products.

The transportation industry is developing and thriving amid ongoing globalization, growing logistics requirements, the rise of e-commerce operations, trade agreements, and advancing technologies. The global transportation services market is expected to surpass $18.63 trillion by 2034, exhibiting a CAGR of 8.1%.

The industry is also shaped by innovations like electric vehicles (EVs), autonomous driving technologies, and connected transport solutions. Businesses are increasingly investing and undertaking market research and insights to remain competitive and capitalize on new opportunities.

Further, according to a Mordor Intelligence Report, the smart transportation market size is estimated to be valued at $35.65 billion in 2025. The market is expected to grow at a CAGR of 6.8%, resulting in a market value of $49.51 billion by 2030. Increasing traffic volume, government initiatives, and rising urbanization are some factors driving market growth.

Given the industry’s robust outlook, investing in quality transportation stocks such as FDX, MATX, and TK could be wise for future gains.

FedEx Corporation (FDX)

FDX offers international transportation, e-commerce, and business services. The company operates in FedEx Express; FedEx Ground; FedEx Freight; and FedEx Services segments. The company provides express transportation, small-package ground delivery, freight transportation services, and time-critical transportation services.

On December 19, 2024, FDX’s Board of Directors concluded a comprehensive assessment of the role of FedEx Freight as part of its portfolio and decided on a full separation of FedEx Freight through the capital markets, creating a new publicly traded company.

The resulting companies, FedEx and FedEx Freight will continue to pursue their growth strategies, and the separation will allow for more customized operational execution, tailored investment, and capital allocation strategies.

Also, on September 18, FDX launched fdx.com, available for FedEx customers in the U.S. It is a data-driven commerce platform with powerful FedEx network insights that connect the entire customer journey. The platform helps FDX’s customers to grow their demand, increase conversion, optimize fulfillment, and streamline returns.

FDX reported revenue of $21.97 billion for the second quarter that ended November 30, 2024, and its adjusted operating income was $1.38 billion. The company’s adjusted net income was $990 million for the quarter, while its adjusted EPS of $4.05 indicates 1.5% year-over-year.

Analysts expect FDX’s revenue for the third quarter (ending February 2025) to increase 0.9% year-over-year to $21.94 billion, and its EPS for the same quarter is expected to grow 22.3% year-over-year to $4.72. Also, it has surpassed the consensus EPS estimates in three of the trailing four quarters.

Shares of FDX have surged 12.1% over the past year to close the last trading session at $274.59.

FDX’s POWR Ratings reflect its sound prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

FDX has a B grade for Quality. It is ranked #3 out of 16 Air Freight & Shipping Services industry stocks.

In addition to the POWR Ratings we’ve stated above, we also have other FDX ratings for Sentiment, Growth, Momentum, Stability, and Value. Get all FDX ratings here.

Matson, Inc. (MATX)

MATX is a provider of ocean transportation and logistics services. The company functions in two primary segments: Ocean Transportation and Logistics. The company offers ocean freight transportation services to the domestic non-contiguous economies.

On September 24, 2024, MATX commenced the construction of the first of three new “Aloha Class” containerships designed for the company’s Hawaii and China-Long Beach Express services. The three new Jones Act-compliant vessels represent an investment of nearly $1 billion.

The first vessel is expected to be delivered by the company in the fourth quarter of 2026, with subsequent deliveries in 2027.

On October 25, MATX’s Board of Directors declared a fourth-quarter dividend of $0.34 per common share, which was paid on December 5, 2024, to all shareholders of record as of the close of business on November 7, 2024.

MATX has raised its dividends for 11 consecutive years. Its annual dividend of $1.36 translates to a yield of 1% at the current share price. The company’s four-year average dividend yield is 1.36%. Also, its dividend payouts have increased at a CAGR of 9% over the past five years.

During the third quarter that ended September 30, 2024, MATX’s total operating revenue increased 16.3% year-over-year to $962 million. Its operating income grew 83.4% from the prior year’s quarter to $242.30 million. The company’s net income and EPS came in at $199.10 million and $5.89, reflecting 66.1% and 73.2% year-over-year increases, respectively.

In addition, the company’s cash and cash equivalents stood at $270.30 million as of September 30, 2024, compared to $134 million as of December 31, 2023.

Street expects MATX’s revenue and EPS for the fourth quarter (ended December 2024) to increase 7.9% and 79.2% year-over-year to $851.50 million and $3.19, respectively. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.

Over the past six months, MATX’s stock has gained 10% and 22.5% over the past year to close the last trading session at $139.21.

MATX’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Growth, Value, and Quality. MATX is ranked #7 in the list of 35 stocks within the A-rated Shipping industry.

Click here to access additional ratings of MATX for Momentum, Stability, and Sentiment.

Teekay Corporation Ltd. (TK)

Headquartered in Hamilton, Bermuda, TK engages in crude oil and other marine transportation services globally. The company owns and operates crude oil and refined product tankers. It also offers ship-to-ship support services, tanker commercial management operation services, and operational and maintenance marine services.

TK’s trailing-12-month EBIT margin of 29.77% is 50.4% higher than the 19.79% industry average. Also, the stock’s trailing 12-month levered FCF margin of 26.99% is considerably higher than the industry average of 6.98%. Further, its trailing-12-month ROTC of 12.11% is 72.6% higher than the 7.02% industry average.

On October 30, 2024, TK’s Board of Directors declared a one-time special cash dividend of $1.00 per outstanding common share of the company. This dividend payment was made on December 18, 2024, to all Teekay shareholders of record on December 4, 2024.

TK reported revenues of $272.62 million for the third quarter that ended September 30, 2024, while its income from vessel operations was $52.19 million for the same period. Adjusted net income attributable to shareholders of Teekay totaled $21.10 million or $0.23 per share for the quarter, respectively.

Furthermore, the company’s total assets were $2.23 billion as of September 30, 2024, versus $2.20 billion as of December 31, 2023.

TK’s stock has surged 25.4% over the past month and 8% over the past nine months to close the last trading session at $7.80.

TK’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

TK has an A grade for Quality and Value. The stock is ranked #10 among the 35 stocks in the A-rated Shipping industry.

Click here to access TK’s other ratings for Growth, Momentum, Stability, and Sentiment.

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FDX shares were trading at $276.28 per share on Tuesday afternoon, up $1.69 (+0.62%). Year-to-date, FDX has declined -1.80%, versus a -0.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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