11 Best Transportation Stocks To Buy Heading Into 2024

In this article, we discuss 11 best transportation stocks to buy for 2024.

In August 2023, there was a 28.4% increase in total air traffic, as measured by revenue passenger kilometers (RPKs), when compared to August 2022, per a report by International Air Transport Association (IATA). Globally, traffic has now reached 95.7% of the levels seen before the COVID-19 pandemic. International traffic experienced a 30.4% growth compared to August last year, with all markets showing double-digit percentage increases year-over-year. The demand for air travel was robust in August, and ticket sales data indicates that international bookings are strengthening for travel in the latter part of the year. Willie Walsh, IATA’s Director General, commented: 

“Heading into the last quarter of the year, the airline industry is nearly fully recovered to 2019 levels of demand. The focus, however, has not been on getting back to a specific number of passengers or flights, but rather on meeting the demand by businesses and individuals for connectivity that was artificially suppressed for more than two years. Having seen the economic, social, and personal losses when airlines could not fly during the COVID-19 crisis, this industry is determined to secure a sustainable long-term future by achieving net zero carbon emissions by 2050. That was clearly evident at the first IATA World Sustainability Symposium (WSS) where discussions focused on how to decarbonize. We know that our customers want a world in which they can enjoy the freedom to travel sustainably. This inaugural WSS was a critical step in aligning policy makers, the aviation value chain and airlines with the concrete steps needed to deliver. And we will measure progress when we meet again in a year’s time.”

On the other hand, shipping is a crucial segment of the transportation sector and it is grappling with multiple challenges. Maersk, a prominent player in global shipping, announced on November 3 that it will cut its workforce by more than 10,000 employees, in addition to projecting lower profits due to overcapacity leading to price declines. Despite this, Maersk maintained its full-year EBITDA guidance of $9.5 billion to $11 billion, but the company anticipates it will be at the lower end of this range. In the third quarter of 2023, Maersk’s revenue came in at $12.1 billion, a steep decline from $22.8 billion in the prior-year quarter. Maersk expects these job cuts to yield an additional $600 million in savings in 2024 when compared to 2023. Moreover, a recent analysis has revealed that the global shipping sector is not making sufficient progress to achieve the target of having zero-emission fuels represent 5% of global shipping fuel by 2030. This lack of progress puts the shipping industry’s 2050 decarbonization goal at risk.

On a positive note, electrification in public transport will make the sector greener. For example, India announced a $7 billion investment t0 promote environmentally friendly public transportation in mid-August, with the goal of reducing vehicle emissions and addressing the growing transportation needs in its urban areas. The plan involves the deployment of 10,000 electric buses in cities, as confirmed by Anurag Thakur, the Indian Information and Broadcasting Minister. The federal government will contribute 200 billion Indian rupees to this initiative, with active participation from private companies. Cities with populations ranging from 300,000 to 4 million residents will be eligible to compete for this funding.

Some of the best transportation stocks to buy for 2024 in order to benefit from the growth potential in the sector include The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), and Uber Technologies, Inc. (NYSE:UBER). 

itsajoop/Shutterstock.com

Our Methodology 

We selected the following transportation stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the second quarter of 2023. The list is arranged in ascending order of the number of hedge fund investors in each firm.

Best Transportation Stocks To Buy Heading into 2024

11. Southwest Airlines Co. (NYSE:LUV)

Number of Hedge Fund Holders: 31

Southwest Airlines Co. (NYSE:LUV) is a passenger airline company offering scheduled air transportation services within the United States and in nearby international regions. Southwest Airlines Co. (NYSE:LUV)’s operating revenue for the third quarter of 2023 came in at $6.5 billion, indicating a 4.9% increase year-over-year. However, the revenue fell market estimates by $40 million. The Q3 non-GAAP EPS of $0.38 also fell short of Street consensus by $0.01. 

According to Insider Monkey’s second quarter database, 31 hedge funds were long Southwest Airlines Co. (NYSE:LUV), compared to 37 funds in the prior quarter. Richard Oldfield’s Oldfield Partners is the biggest stakeholder of the company, with 2.75 million shares worth approximately $100 million. 

In addition to The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), and Uber Technologies, Inc. (NYSE:UBER), Southwest Airlines Co. (NYSE:LUV) is one of the best transportation stocks to buy. 

Here is what ClearBridge Investments has to say about Southwest Airlines Co. (NYSE:LUV) in its Q1 2021 investor letter:

“One of our goals as we constantly monitor the portfolio is to see if we can better deploy capital by lowering the probability of being wrong. This motivation drove our swap of Delta Airlines into Southwest Airlines during the quarter. We expect a huge rebound in airline traffic as COVID-19 concerns abate, but we are much more comfortable that it will be led by leisure travel. Conversely, we are more uncertain of the ultimate level and timing of business travel demand. Southwest, with its simple fare strategy and high leisure travel exposure, is better positioned to capture the ongoing traffic rebound without having to answer the business travel demand question on which Delta is more dependent. As a result, we expect Southwest to play serious offense as it gains share in the rebounding travel market and can fully leverage the massive pent-up demand for travel that we expect. In addition, the U.S. lead in vaccination over Europe favors Southwest over Delta, given the domestic focus of Southwest. COVID-19 has changed many things, but humans by their very nature like to move, and many of them will do it on Southwest.”

10. Knight-Swift Transportation Holdings Inc. (NYSE:KNX)

Number of Hedge Fund Holders: 35

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) delivers freight transportation services in the United States and Mexico. The company is divided into four segments – Truckload, Less-than-truckload (LTL), Logistics, and Intermodal. It is one of the best transportation stocks to buy. On October 19, Knight-Swift Transportation Holdings Inc. (NYSE:KNX) reported a Q3 non-GAAP EPS of $0.41 and a revenue of $2.02 billion, outperforming Wall Street estimates by $0.05 and $90 million, respectively. 

According to Insider Monkey’s second quarter database, 35 hedge funds were bullish on Knight-Swift Transportation Holdings Inc. (NYSE:KNX), compared to 32 funds in the prior quarter. Ben Jacobs’ Anomaly Capital Management is the largest stakeholder of the company, with 2.5 million shares worth over $139 million. 

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Knight-Swift Transportation Holdings Inc. (NYSE:KNX) in its Q2 2023 investor letter:

“Results were less than anticipated for the truckload freight transportation provider, Knight-Swift Transportation Holdings Inc. (NYSE:KNX) which led its shares down by -2%. Management notably reduced its guidance for the current fiscal year, which we had been expecting when we initiated this position in late January. Our view is that truckload activities were nearing a trough and this industry tends to recover quickly from such bottoms.”

9. XPO, Inc. (NYSE:XPO)

Number of Hedge Fund Holders: 35

XPO, Inc. (NYSE:XPO) provides freight transportation services in the United States, North America, the United Kingdom, and Europe. The company’s operations are divided into two segments – North American LTL and European Transportation. XPO, Inc. (NYSE:XPO) announced Q3 non-GAAP earnings per share of $0.88 and a revenue of $1.98 billion, outperforming Wall Street estimates by $0.24 and $50 million, respectively. In the third quarter, the company generated $236 million in operating cash flow and finished the quarter with $355 million in cash and cash equivalents. XPO, Inc. (NYSE:XPO) is one of the best transportation stocks to monitor. 

According to Insider Monkey’s second quarter database, XPO, Inc. (NYSE:XPO) was part of 35 hedge fund portfolios, compared to 30 in the prior quarter. Farhad Nanji and Michael Demichele’s MFN Partners is the largest stakeholder of the company, with 12.6 million shares valued at $747.8 million. 

ClearBridge SMID Cap Growth Strategy made the following comment about XPO, Inc. (NYSE:XPO) in its Q2 2023 investor letter:

“Our holdings in the industrials sector positively contributed to relative performance. Corporate earnings for the industrials sector have continued to exceed market expectations thanks in part to the diversity of industries and end markets for their products. Specifically, the portfolio benefited from its investments in XPO, Inc. (NYSE:XPO), our top individual performer, and Vertiv. XPO, which provides freight transportation services globally, saw its share price increase after the company announced it had hired an experienced industry veteran as its new president who is expected to implement new initiatives to help drive further margin expansion.”

8. American Airlines Group Inc. (NASDAQ:AAL)

Number of Hedge Fund Holders: 35

American Airlines Group Inc. (NASDAQ:AAL) operates as a network air carrier, offering passenger and cargo air transportation services through different hubs and partner gateways worldwide. American Airlines Group Inc. (NASDAQ:AAL) is one of the top transportation stocks to monitor. On October 19, the company reported a Q3 non-GAAP EPS of $0.38, beating market estimates by $0.12. However, the revenue of $13.48 billion fell short of Wall Street forecasts by $60 million. 

According to Insider Monkey’s second quarter database, 35 hedge funds held stakes in American Airlines Group Inc. (NASDAQ:AAL), compared to 36 funds in the prior quarter. D E Shaw is a prominent stakeholder of the company, with 12.2 million shares worth $219.6 million. 

7. United Airlines Holdings, Inc. (NASDAQ:UAL)

Number of Hedge Fund Holders: 40

United Airlines Holdings, Inc. (NASDAQ:UAL) offers air transportation services globally, carrying passengers and cargo through its fleets. United Airlines Holdings, Inc. (NASDAQ:UAL) is one of the best transportation stocks to invest in. On October 17, the company reported a Q3 non-GAAP EPS of $3.65 and a revenue of $14.48 billion, outperforming Wall Street estimates by $0.24 and $70 million, respectively. Capacity also increased 15.7% compared to the prior-year quarter. 

According to Insider Monkey’s second quarter database, 40 hedge funds were bullish on United Airlines Holdings, Inc. (NASDAQ:UAL), same as the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with approximately 5 million shares worth $272.4 million. 

6. Canadian Pacific Kansas City Limited (NYSE:CP)

Number of Hedge Fund Holders: 52

Canadian Pacific Kansas City Limited (NYSE:CP) operates a transcontinental freight railway in Canada and the United States, transporting bulk commodities and merchandise freight, as well as intermodal traffic, including retail goods in overseas containers. On October 25, Canadian Pacific Kansas City Limited (NYSE:CP) reported a Q3 non-GAAP EPS of C$0.92 and a revenue of C$3.34 billion, exceeding market forecasts by C$0.26 and C$900 million, respectively. 

According to Insider Monkey’s second quarter database, 52 hedge funds were bullish on Canadian Pacific Kansas City Limited (NYSE:CP), compared to 48 funds in the preceding quarter. Like The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), and Uber Technologies, Inc. (NYSE:UBER), Canadian Pacific Kansas City Limited (NYSE:CP) is one of the top transportation stocks preferred by hedge funds.

Pershing Square Holdings made the following comment about Canadian Pacific Kansas City Limited (NYSE:CP) in its first half 2023 investor letter:

Canadian Pacific Kansas City Limited (NYSE:CP) is a high-quality business with significant earnings growth potential that operates in an oligopolistic industry with considerable barriers to entry and significant pricing power due to its high quality competitive transportation offering. After receiving regulatory approval from the Surface Transportation Board on March 15, Canadian Pacific closed the acquisition of Kansas City Southern on April 14th and renamed the combined company Canadian Pacific Kansas City.

CPKC is a high-quality business with significant earnings growth potential that operates in an oligopolistic industry with considerable barriers to entry and significant pricing power due to its high quality competitive transportation offering. After receiving regulatory approval from the Surface Transportation Board on March 15, Canadian Pacific closed the acquisition of Kansas City Southern on April 14th and renamed the combined company Canadian Pacific Kansas City. …” (Click here to read the full text)

5. Delta Air Lines, Inc. (NYSE:DAL)

Number of Hedge Fund Holders: 56

Delta Air Lines, Inc. (NYSE:DAL) offers passenger and cargo air transportation in the United States and internationally. The company operates with two segments, Airline and Refinery, with a strong domestic and international network. It is one of the best transportation stocks to buy. On October 12, Delta Air Lines, Inc. (NYSE:DAL) reported a Q3 non-GAAP EPS of $2.03 and a revenue of $15.49 billion, outperforming Wall Street estimates by $0.08 and $360 million, respectively. 

According to Insider Monkey’s second quarter database, 56 hedge funds were long Delta Air Lines, Inc. (NYSE:DAL), same as the prior quarter. Thomas E. Claugus’ GMT Capital is the largest stakeholder of the company, with 6.3 million shares worth $301.5 million. 

Patient Capital Management made the following comment about Delta Air Lines, Inc. (NYSE:DAL) in its Q3 2023 investor letter:

“Airlines returned to trough multiples as higher oil prices pressured costs. Historically, airlines have passed these costs on to customers. We think Delta Air Lines, Inc. (NYSE:DAL) is a premium brand valued like its economics aren’t sustainable. With mid-teens returns on capital, significant free cash flow generation, excellent capital allocation and long-term earnings per share growth in the high-single to low-double-digits, we think the company is significantly mispriced.

Delta Air Lines Inc. (DAL) reversed course in the third quarter, falling 24% from its highs in July. The airlines in general were hurt from rising commodity prices that are leading to increased cost per available seat mile (CASM). Historically, airlines have passed on higher fuel prices to customers with a lag. We see Delta as a premium global consumer brand that is materially misunderstood by the market. The market still sees airlines as a cyclical, bankruptcy prone industry. An improved supply-demand picture, management discipline and a better business mix make Delta a more resilient business. Their loyalty program with American Express is a source of stable and growing revenues with $6.5B in remunerations this year with a goal of reaching $10B by the end of the contract in 2028. Premium and ancillary service revenue should generate 65-70% of the total in the next year or two. The company should continue to generate consistent mid-teens returns on capital. As the market begins to understand, we believe the company will continue to be rewarded. On top of this, free cash flow is expected to expand generating a cumulative ~$11B from ’23-’25, or one-half of its current market cap. As the company pays down debt while growing the dividend and eventually resuming share repurchases, we think the stock will continue to trend higher.”

4. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 57

The Boeing Company (NYSE:BA) engages in the design, development, manufacturing, and servicing of commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems, and related services on a global scale. The company is divided into four segments – Commercial Airplanes, Defense, Space & Security, Global Services, and Boeing Capital. The Boeing Company (NYSE:BA) is one of the top transportation stocks to invest in. 

On November 1, Goldman Sachs added The Boeing Company (NYSE:BA) to its Conviction Buy list. According to Noah Poponak, an analyst at Goldman Sachs, investors appear to be giving more attention to short-term disruptions rather than long-term fundamentals and normalized free cash flow, which he sees as a buying opportunity. The analyst maintained a $258 price target on Boeing. 

According to Insider Monkey’s second quarter database, 57 hedge funds were bullish on The Boeing Company (NYSE:BA), compared to 52 funds in the prior quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent stakeholder of the company, with 2 million shares worth $438.6 million. 

Meridian Funds made the following comment about The Boeing Company (NYSE:BA) in its Q3 2022 investor letter:

“We similarly remained invested in largely out-of-favor The Boeing Company (NYSE:BA) , a global leader in developing and producing commercial jet aircraft. Due to some self-inflicted wounds and a bit of bad luck, as well as dramatic declines in air travel early in the pandemic, investor sentiment for this company has simply been awful. As part of our contrarian thinking, however, we view the business as critical to global transportation needs and see multiple catalysts to improve sentiment. In addition to the current surge in air travel worldwide, ramped up production of the 737 MAX aircraft and the pending restart of 787 Dreamliner deliveries should help turn broader sentiment. Additionally, we anticipate a meaningful inflection in cash flow as Boeing starts delivering aircraft currently in storage as well as the eventual expansion of its production in both core platforms.”

3. CSX Corporation (NASDAQ:CSX)

Number of Hedge Fund Holders: 64

CSX Corporation (NASDAQ:CSX) provides rail-based freight transportation services, including intermodal container and trailer transportation, chemical, food, and mineral transport, as well as coal and iron ore shipping to different industries. On October 11, CSX Corporation (NASDAQ:CSX) declared a quarterly dividend of $0.11 per share, in line with previous. The dividend is distributable on December 15, to shareholders of record as of November 30. 

According to Insider Monkey’s second quarter database, 64 hedge funds were bullish on CSX Corporation (NASDAQ:CSX), compared to 61 funds in the last quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the leading stakeholder of the company, with 52.5 million shares worth $1.8 billion. 

Here is what ClearBridge Investments Global Infrastructure Value Strategy has to say about CSX Corporation (NYSE:CSX) in its Q4 2021 investor letter:

“On a regional basis, the U.S. and Canada were the top contributors to quarterly performance, of which U.S. rail operator CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beat market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”

2. Union Pacific Corporation (NYSE:UNP)

Number of Hedge Fund Holders: 84

Union Pacific Corporation (NYSE:UNP) is engaged in the railroad business in the United States. The company provides transportation services for grain, fertilizers, petroleum, construction products, chemicals, forest products, and metals. Union Pacific Corporation (NYSE:UNP) is one of the best transportation stocks to buy. On October 19, the company reported a Q3 GAAP EPS of $2.51, beating market estimates by $0.08. However, the revenue of $5.94 billion fell short of Street consensus by $40 million. 

According to Insider Monkey’s second quarter database, 84 hedge funds were long Union Pacific Corporation (NYSE:UNP), compared to 85 funds in the preceding quarter. Eric W. Mandelblatt’s Soroban Capital Partners is the largest stakeholder of the company, with 8.26 million shares worth $1.7 billion. 

Cooper Investors made the following comment about Union Pacific Corporation (NYSE:UNP) in its Q3 2023 investor letter:

“The major focus in Texas was spending a day visiting operations of Union Pacific Corporation (NYSE:UNP), a Stalwart investment made earlier this year.

Our investigations into the railroad industry have felt like a history lesson of the late 19th Century, a peek into the Gilded Age. At this time railroads became a transformative force that connected the East Coast to the Western frontier, pushing the economic potential of US industry and commerce to new heights. Over a century later and despite technological upheaval, the freight railroads of North America still feel just as relevant and a key part of the new industrial age.

To own, operate and invest in a railroad is to be a part of the lifeblood of North America. It is to witness the movement of grain, concrete, steel, wood, energy, autos, and shipping containers across vast distances. These are irreplaceable assets that could not be built today, and for the most part have very few substitutes – UNPs tagline “Building America” certainly rings true…” (Click here to read the full text)

1. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 144

Uber Technologies, Inc. (NYSE:UBER) develops and operates technology applications for transportation services worldwide. It operates in three segments – Mobility, Delivery, and Freight. Uber Technologies, Inc. (NYSE:UBER) is one of the best transportation stocks to buy. On September 28, Uber’s CEO, Dara Khosrowshahi, announced a shift in focus towards profitability during a speech at the Skift Global Forum in New York. The company intends to prioritize cost management and expand its offerings by introducing travel products, aiming to grow its reach while keeping costs under control. This comes after Uber reported its first quarterly profit and $1.2 billion in free cash flow during June, marking a change from its earlier years of substantial losses.

According to Insider Monkey’s second quarter database, Uber Technologies, Inc. (NYSE:UBER) was part of 144 hedge fund portfolios, same as the prior quarter. Brad Gerstner’s Altimeter Capital Management is the largest stakeholder of the company, with 13.3 million shares worth $575.7 million. 

Aristotle Large Cap Growth Strategy made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:

“Uber Technologies, Inc. (NYSE:UBER) develops and operates proprietary technology applications. The company operates through three segments: Mobility, Delivery and Freight. The Company develops and operates proprietary technology applications supporting a variety of offerings on its platform.

We see the company as the global leader in ride-hailing and one of the few delivery app companies with a strong network effect for both businesses. Uber is experiencing strong revenue growth as adoption and frequency of usage continue to grow in both segments. We expect the company will also benefit from more demand due to the higher frequency of workers attending work in the office, rather than working from their homes. We look for revenue growth as the adoption of Uber’s services increases and the company expands globally.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 10 Best Social Media Platforms For eCommerce and 12 Stocks that Could Skyrocket According to Investment Newsletters.

Suggested articles:

• 11 Best Uranium Stocks To Buy
• 12 Best Large Cap Stocks To Buy Now
• 12 Best Small-Cap Biotech Stocks with Massive Potential According to Hedge Funds

Disclosure: None. 11 Best Transportation Stocks To Buy Heading Into 2024 is originally published on Insider Monkey.