In this article, we will discuss 10 best TaaS stocks to buy now.
TaaS or Transportation as a Service is one of the fastest growing sectors in the current market. It refers to the integration of multiple transportation services such as ride-sharing, bike, and car rentals into a single digital on-demand mobility platform. The services can be acquired through subscriptions or a pay-as-you-go model.
Global Impact of TaaS
At the World Economic Forum, General Motors Company (NYSE:GM) CEO Mary Barra said, “I believe the auto industry will change more in the next five to 10 years than it has in the last 50.” This is mostly true because of the advent of TaaS. The value of the global Transportation as a Service market was $3.3 billion in 2021, and it is expected to grow to $40 billion in 2027, according to Market and Markets.
The global transportation industry saw a steep decline in 2020 due to the COVID-19 impact. However, given the roll-out of vaccinations, the industry started to go back to normal in 2021. For example, Uber Technologies, Inc. (NYSE:UBER) faced a loss of $1.8 billion in Q2 of 2020 as the COVID restrictions proved to be a big hurdle and resulted in bookings plummeting. However, in the first quarter of 2021, the company reported a 24% increase in bookings. FedEx Corporation (NYSE:FDX), on the other hand, saw a rise in its business during the pandemic. In addition, with the ease of lockdown in 2021, the stock price for the company tripled in a single quarter.
Tesla, Inc. (NASDAQ:TSLA) is trying to enter the TaaS industry very soon and is looking to adopt driverless vehicle technology. According to Global Equities Research analyst Trip Chowdhry, the company is working on “stealth projects” that will affect the TaaS industry in a major way.
Even with millions or billions of car enthusiasts in the world, the economic impact of TaaS is expected to disrupt the activities of car dealers. The average annual expenditure on maintaining a car is around $9,000. According to a report by RethinkX, an average American family is set to save around $5,600 per annum because of the TaaS industry. The amount is equal to adding 10% annual wage to a family.
Apart from all that, TaaS will have a positive global environmental impact. One of the biggest favorable impacts of the industry will be lesser traffic on the roads, resulting in lower carbon emissions. Moreover, TaaS companies are investing in greener electric cars. For example, Hertz Global Holdings Inc (NYSE:HTZ) has pledged to add 100,000 Teslas to its subsidiary, Hertz Corporation’s fleet. Some of the most notable TaaS players to watch include Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA).
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Our Methodology
We did a thorough research of the Transportation as a Service industry and picked these stocks based on the hedge fund sentiment, analyst ratings, and other growth catalysts. The hedge fund sentiment around each stock has been taken from Insider Monkey’s Q4 2021 database of 924 hedge funds.
Best TaaS Stocks to Buy Now
10. GATX Corporation (NYSE:GATX)
Number of Hedge Funds: 14
GATX Corporation (NYSE:GATX) is a railcar leasing company with a fleet of around 150,000 across North America, Europe, and Asia. The company has returned more than 177% to its investors during the last decade.
GATX Corporation (NYSE:GATX) seems to be outperforming the transportation sector with a 2.1% return this year compared to the industry average of -13.8% YTD. The dividend yield of the company at 2.01% also exceeds the industry average of 1.17%. For the first quarter of 2022, GATX Corporation (NYSE:GATX) surprised its EPS estimates by 68.10%. However, the company missed its revenue estimates by $6.15 million after generating $316.6 million.
In the fourth quarter of 2021, 14 hedge funds remained bullish on GATX Corporation (NYSE:GATX). Mario Gabelli’s GAMCO Investors held the most significant stake with 1.686 million shares worth $175.7 million, making up 1.5% of the fund’s portfolio.
Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA) are some of the companies along with GATX Corporation (NYSE:GATX) that investors should be attentive towards.
9. GXO Logistics, Inc. (NYSE:GXO)
Number of Hedge Funds: 37
GXO Logistics, Inc. (NYSE:GXO) is an American logistics company headquartered in Connecticut. The company’s operations take place in close to 900 warehouses and approximately 210 million sq ft of facility space. On March 16, GXO Logistics, Inc. (NYSE:GXO) announced the deployment of a fleet of autonomous robots across the U.K and the Netherlands.
According to GXO Logistics, Inc. (NYSE:GXO)’s first quarter 2022 results, the company generated $2.1 billion in revenue, compared to $1.8 billion in the same quarter of the previous year. On top of that, the net income credited to the company was $37 million, up from $14 million in the first quarter of 2021.
GXO Logistics, Inc. (NYSE:GXO) shows a promising future and a strong balance sheet. The company had a 19% organic revenue growth according to its first-quarter 2022 reports. This makes it the fifth consecutive quarter for the company to have a double-digit organic growth. Additionally, the estimated EBITDA for GXO Logistics, Inc. (NYSE:GXO) is expected to be around $730 million in 2022, with an expected increase to $823 million the next year.
GXO Logistics, Inc. (NYSE:GXO) was mentioned by ClearBridge Investments in its third-quarter 2021 investor letter. The content of the letter is as follows:
“GXO Logistics was recently spun off from its parent company, XPO Logistics, to become the world’s second-largest contract logistics provider. The quality of this business is underappreciated by the market because it had been embedded within XPO and lacked visibility. We believe the stock will receive a higher valuation as its attributes become more widely recognized, including revenue growth of high single to low double digits, +90% retention rate, business visibility from multiyear contracts, and +20% return on invested capital. GXO’s superior business makeup also adds to its appeal, with 30% of sales coming from automation and robotics, compared to the industry average of 5%. E-commerce and technology drive 50% of total revenue.”
8. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Funds: 27
Avis Budget Group, Inc. (NASDAQ:CAR) is an American car rental company based in New Jersey. The company is a solid growth stock as its EPS is expected to grow by 45.2% by the end of the year, compared to the industry average of 14.3% growth. In addition, Avis Budget Group, Inc. (NASDAQ:CAR)’s cash flow growth has been 10.5% over the past 3-5 years.
Avis Budget Group, Inc. (NASDAQ:CAR) outperformed the analysts’ estimates by a huge margin in the first quarter of 2022. The EPS reported by the company was $9.99, while the consensus was at a meager $3.54. In the same quarter, the company generated a revenue of $2.43 billion, which was $295.89 million more than the forecasts.
On May 4, Deutsche Bank analyst Chris Woronka raised the price target for Avis Budget Group, Inc. (NASDAQ:CAR) from $193 to $238 with a Hold rating on the company shares. According to the analyst, “ownership and trading dynamics in place” remain to be the main driving force behind the stocks in the foreseeable future.
Here is what Broyhill Asset Management had to say about Avis Budget Group, Inc. (NASDAQ:CAR) in their fourth-quarter 2021 investor letter:
“Avis surged 166% during the final two quarters of the year. The company hit a new record for quarterly EBITDA – third quarter EBITDA was higher than any full year in Avis history – while buying back nearly $1B of stock and announcing another $1B increase in their repurchase authorization. Shares hit an intra-day peak of $545 after reporting earnings, ultimately closing at $357, more than doubling the prior close. Frenzied retail trading, prompted by management commentary around electric vehicles adoption, prompted a dozen trading halts throughout the day. The mania grew so intense that TD Ameritrade stopped allowing short sales in Avis, as short interest represented ~ 30% of the float.”
7. Expeditors International of Washington, Inc. (NASDAQ:EXPD)
Number of Hedge Funds: 29
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is an American logistics company. On May 2, the company’s Board of Directors announced a 6-month cash dividend of $0.67 per share. The dividend is payable on June 15, to shareholders of record as of June 1, 2022.
Expeditors International of Washington, Inc. (NASDAQ:EXPD) has been quite consistent in beating its revenue and EPS estimates for the last eight quarters. For the first quarter of 2022, the company beat estimates by 21.34% at $2.37, compared to Street forecasts of $1.71. Additionally, Expeditors International of Washington, Inc. (NASDAQ:EXPD) generated revenue of $4.66 billion, compared to the $4.26 billion estimates.
According to Insider Monkey’s database, 29 hedge funds held stakes in Expeditors International of Washington, Inc. (NASDAQ:EXPD) as of the fourth quarter of 2021. The number was 26 in the previous quarter. The largest stake was owned by First Eagle Investment Management, with 2.4 million shares worth $250.8 million. In the same quarter, Renaissance Technologies increased its activity in Expeditors International of Washington, Inc. (NASDAQ:EXPD) at a staggering 1026% percent and held the second most prominent stake in the company.
6. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Funds: 59
Union Pacific Corporation (NYSE:UNP) is a railroad holding company based in Utah. The company is a notable dividend stock as it shells out a dividend yield of 2.11%, compared to the industry average of 1.15% and the S&P 500’s yield of 1.57%. On May 12, Union Pacific Corporation (NYSE:UNP)’s Board of Directors announced a dividend increase of 10%. Over the last 5 years, the company has raised its dividends 4 times, with an average annual rate of 13.86%.
Due to the oil price hike, Union Pacific Corporation (NYSE:UNP)’s expenses increased by 16% in March 2022. Despite that, the company has returned $3.5 billion to its shareholders in the first quarter of 2022. The reported EPS of Union Pacific Corporation (NYSE:UNP) for the first quarter of 2022 was $2.57, beating the estimates by 0.16%. In the same quarter, the company generated a revenue of $5.86 billion, compared to the $5.76 billion estimates.
On April 22, Raymond James analyst Patrick Tyler Brown raised Union Pacific Corporation (NYSE:UNP)’s price target to $285 from $280 with a Strong Buy rating. According to the analyst, “improved service, the ESG benefits of rail, and a tight truck market could all yield a potent elixir, driving volumes, price, and earnings higher than contemplated.”
Union Pacific Corporation (NYSE:UNP), along with Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA), are some TaaS stocks with strong growth catalysts.
ClearBridge Investments mentioned Union Pacific Corporation (NYSE:UNP) in their fourth-quarter 2021 investor letter. Here is what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
5. Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge funds: 43
Lyft, Inc. (NASDAQ:LYFT) is a California-based ride-hailing service. The company is United States’ second largest ride-sharing service, with a 29% market share. The company fell hard during the COVID-19 pandemic. However, it made a swift return with a 36% revenue growth YoY in 2021. According to Fortune Business Insights, Lyft, Inc. (NASDAQ:LYFT) could achieve a CAGR of more than 30% from 2021 to 2028, given its pivoting business model towards autonomous vehicles.
Lyft, Inc. (NASDAQ:LYFT) performed well in the first quarter of 2022, reporting an EPS of $0.07, compared to -$0.07 estimates. The revenue generated was $875.58 million, outperforming the estimates by 3.47%. Analyst forecasts show that Lyft, Inc. (NASDAQ:LYFT) is expected to grow its revenue by 33% for the fiscal year 2022 and 24.2% for 2023. Furthermore, the company is expected to expand its EBITDA by 154.5% for the financial year 2022 and a further 150.1% by the next year.
The hedge fund sentiment was positive for Lyft, Inc. (NASDAQ:LYFT) in the fourth quarter of 2021, with 43 hedge funds having a stake in the company compared to 33 in the third quarter. Alkeon Capital Management was the most prominent shareholder of the company, with 4.9 million shares worth $211 million. The fund increased its activity by 5% in the fourth quarter as compared to the third.
Here is what ClearBridge Investments had to say about Lyft, Inc. (NASDAQ:LYFT) in their second-quarter 2021 investor letter:
“We also added to our disruptors exposure in the second quarter with the purchase of Lyft, a leading, U.S. focused ride-hailing business. Lyft operates in a rational duopoly with Uber and has been able to maintain consistent 30%–35% market share for the past several years. The company should be a key beneficiary of the U.S. reopening, with a post-COVID-19 recovery in rideshare demand driving an acceleration in volumes and revenue. We also see considerable runway for growth beyond this rebound, as rideshare remains underpenetrated. Lyft’s ability to weather a period of significant demand destruction in 2020 is encouraging and we see opportunity for margin expansion ahead. Despite volatility created by ongoing labor negotiations, we see the potential for new, state-level legislation creating collective bargaining rights for gig economy workers to provide greater certainty around industry labor costs, with increases that should be manageable.”
4. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Funds: 52
DoorDash, Inc. (NYSE:DASH) had strong Q1 2022 results as the revenue grew by 35% YoY to $1.46 billion, compared to the $1.39 billion consensus. However, the company lost 48 cents per share, which was expected to be just 42 cents. Nonetheless, this did not stop DoorDash, Inc. (NYSE:DASH) from rising 6% the day after the company released its quarterly reports.
According to the Insider Monkey database, 52 hedge funds were bullish on DoorDash, Inc. (NYSE:DASH) stock compared to 42 in the previous quarter. Tiger Global Management LLC remained the most prominent stakeholder, with 11.6 million shares worth $1.7 billion and a 6% increase in activity compared to the previous quarter.
3. FedEx Corporation (NYSE:FDX)
Number of Hedge Funds: 64
FedEx Corporation (NYSE:FDX) is an American multinational conglomerate holding company specializing in transportation and e-commerce. Between April and May, FedEx Corporation (NYSE:FDX) had gained 4.3%, despite the loss of 2.43% to the transportation sector. Nearing its next quarter report to be released in June, the company is expected to announce an EPS of $6.87.
The hedge fund sentiment towards FedEx Corporation (NYSE:FDX) was positive in the fourth quarter of 2021, compared to the previous quarter. In the fourth quarter, 64 out of the 924 hedge funds tracked by Insider Monkey held stakes in FedEx Corporation (NYSE:FDX), up from 49 in the previous quarter.
The investment management firm Artisan Partners mentioned FedEx Corporation (NYSE:FDX) in their Q3 2021 investor letter. Here is what the firm said:
“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”
2. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Funds: 55
The American shipping and receiving company, United Parcel Service, Inc. (NYSE:UPS), has shown growth in every segment compared to the previous year. The company reported revenue growth of 8% for the U.S. Domestic business and the International by 5.8% to $15.1 billion and $4.9 billion, respectively. The revenue of United Parcel Service, Inc. (NYSE:UPS) for the fiscal year 2022 is expected to be 5% better than 2021 at $102 billion.
In the first quarter of 2022, United Parcel Service, Inc. (NYSE:UPS) had strong results, with an EPS of $3.05, which was $0.17 above the forecasts. On top of that, the company beat its revenue estimates by 2.43% at $24.38 billion, compared to $23.80 billion analyst estimates. United Parcel Service, Inc. (NYSE:UPS) had revenue growth of 27% compared to the same period last year. Similarly, the EPS YoY growth doubled compared to the first quarter of 2021.
Out of the 924 hedge funds tracked by Insider Monkey, 55 held stakes in United Parcel Service, Inc. (NYSE:UPS) in the fourth quarter of 2021, compared to 42 in the previous quarter. The most prominent stake was held by Bill & Melinda Gates Foundation Trust, with 2.28 million shares worth $489.556 million.
Here is what ClearBridge Investments had to say about United Parcel Service, Inc. (NYSE:UPS) in their fourth-quarter 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic. These consistent growers were complemented by solid contributions from structural holdings including United Parcel Service.”
1. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Funds: 153
Uber Technologies, Inc. (NYSE:UBER) is one of the biggest Transport as a Service stocks on the market. The company started in San Francisco, California, and currently operates in 77 countries and 10,500 cities across the world. As of the beginning of 2022, the company covered around 77% of the market share for ride-sharing.
In the first quarter of 2022, Uber Technologies, Inc. (NYSE:UBER)’s revenue jumped 136% compared to the first quarter of 2021, reaching $6.9 billion. The quarterly trips for the company reached around 1.17 billion, an 18% increase compared to the same period in the previous year. This included mobility gross bookings of $10.7 billion and delivery gross bookings of $13.9 billion, which were up by 12% on a YoY basis. Moreover, Uber Technologies, Inc. (NYSE:UBER) generated $6.85 billion in revenue compared to the estimated $6.10 billion.
Fisher Asset Management has been the most prominent stakeholder in Uber Technologies, Inc. (NYSE:UBER) in the first quarter of 2022. The fund increased its activity in the company by 58% and owned 23.796 million shares worth $849 million.
ClearBridge Investments published its “Large Cap Growth Strategy” third quarter 2021 investor letter in the fourth quarter of 2021. Here is what it said about Uber Technologies, Inc. (NYSE:UBER):
“We have also been looking for multi-year secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber Technologies, Inc. (NYSE:UBER) will also be a key player in the transition from internal combustion engines to EVs.”
You can also take a peek at 10 European Defense Stocks to Buy Now and 10 Growth ETFs to Buy Now.
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Disclosure: None. 10 Best TaaS Stocks to Buy Now is originally published on Insider Monkey.
