Despite the macroeconomic challenges, well-positioned transportation companies have performed well. While the stock market might remain under pressure in the near term, investors could consider buying fundamentally sound transportation stocks, International Seaways, Inc. (INSW - Get Rating) and Euroseas Ltd. (ESEA - Get Rating).

The transportation industry in the United States is valued at $1.36 trillion and 10.68 million Americans were employed in the transportation and warehousing industry in 2022.

The dry bulk shipping market is expected to grow at a CAGR of 3.9% until 2027. The market is expanding with increased global seaborne trade, increased iron ore and coal transportation, and an increasing emphasis on infrastructure development.

Additionally, on-demand transportation provides services in response to a customer’s direct request to go from one location to another. The on-demand transportation sector employs a variety of vehicles, including commercial and passenger cars. According to Market.us, the Global On-Demand transportation market will expand at a 19.4% CAGR until 2032.

Let’s discuss the stocks mentioned above in detail.

International Seaways, Inc. (INSW - Get Rating)

INSW owns and operates a fleet of oceangoing vessels for the transportation of crude oil and petroleum products in the international flag trade. It operates in two segments: Crude Tankers and Product Carriers.

INSW’s ROTA of 14.83% is 80.9% higher than the 8.20% industry average. Likewise, its trailing-12-month EBITDA margin of 59.65% is 72.2% higher than the industry average of 34.64%.

Over the last three years, INSW’s dividend payouts have grown at a 100% CAGR. While INSW’s four-year average dividend yield is 3.08%, the company’s annual dividend of $0.48 yields 1.20% at the current price level.

For the fiscal fourth quarter that ended December 31, 2022, INSW’s total shipping revenue increased 257.2% year-over-year to $338.16 million. Its net income attributable came in at $218.43 million, compared to a net loss of $33.99 million in the prior-year quarter. Also, its EPS came in at $4.40, compared to a loss per share of $0.68 in the year-ago period.

The consensus revenue estimate of $940.43 million for the year ending 2023 represents a 10.2% increase year-over-year. Its EPS is expected to grow 16.7% year-over-year to $8.91 in 2023. It has surpassed the EPS estimates in three of four trailing quarters. The stock has gained 97.4% over the past month to close its last trading session at $39.03.

It’s no surprise that INSW has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It also has an A grade for Momentum and a B grade for Growth, and Quality. It is ranked #15 out of 39 stocks in the A-rated Shipping industry. To access additional ratings for INSW’s Value, Sentiment, and Stability, click here.

Euroseas Ltd. (ESEA - Get Rating)

Based in Marousi, Greece, ESEA provides ocean-going transportation services worldwide.

In terms of trailing-12-month ESEA’s ROTA of 32.33% is 526.7% higher than the 5.16% industry average. Likewise, its trailing-12-month EBIT margin of 57.49% is 498.6% higher than the industry average of 9.60%.

While ESEA’s four-year average dividend yield is 1.32%, the company’s annual dividend of $2 yields 10.88% at the current price level.

For the fourth quarter that ended December 31, 2022, ESEA’s revenue increased 12.1% year-over-year to $42.89 million. As of December 31, 2022, the company’s total current assets were $48.87 million, compared to $32.89 million as of December 31, 2021. Also, ESEA’s total assets were $328.59 million, compared to $221.42 million for the same period.

Street expects ESEA’s revenue to increase 14.2% year-over-year to $207.70 million in 2024. Its EPS is expected to come in at $10.07 in 2024. ESEA’s share have lost marginally intraday to close the last trading session at $18.39.

ESEA’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, translating to Buy in our proprietary rating system.

It also has a B grade for Value, Sentiment, Momentum and Quality. It is ranked #10 within the same industry. Click here to see the additional ratings for ESEA (Growth and Stability).

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INSW shares were unchanged in premarket trading Wednesday. Year-to-date, INSW has gained 10.07%, versus a 8.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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