S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
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How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
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It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
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Stock market today: World stocks track Wall Street gains, Japan shares hit record high
China's manufacturing activity contracts for 5th straight month despite policy support
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Revolutionary Device Redefines Cancer Detection (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Revolutionary Device Redefines Cancer Detection (Ad)
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Stock market today: World stocks track Wall Street gains, Japan shares hit record high
China's manufacturing activity contracts for 5th straight month despite policy support
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Revolutionary Device Redefines Cancer Detection (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Revolutionary Device Redefines Cancer Detection (Ad)
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Stock market today: World stocks track Wall Street gains, Japan shares hit record high
China's manufacturing activity contracts for 5th straight month despite policy support
S&P 500   5,096.27
DOW   38,996.39
QQQ   439.00
Pure Storage, Hormel Foods rise; WW International, First Advantage fall, Thursday, 2/29/2024
Revolutionary Device Redefines Cancer Detection (Ad)
How major US stock indexes fared Thursday, 2/29/2024
Average long-term US mortgage rises to 6.94% after marking fourth-straight weekly increase
Revolutionary Device Redefines Cancer Detection (Ad)
Grads From This Midwestern School Are More Likely to Start a Billion Dollar Company Than Founders Who Went To Stanford, Harvard, or MIT: Study
It's Leap Day, and You're Probably Working — Here's How 'February 29' Affects Your Paycheck
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Stock market today: World stocks track Wall Street gains, Japan shares hit record high
China's manufacturing activity contracts for 5th straight month despite policy support

Transportation industry breakout will make these stocks rally

Transportation Stocks

Key Points

  • The transportation industry has yet to receive its due credit for pushing the U.S. economy forward this quarter, though some did notice.
  • Investment banks are buying up these winning stocks in the sector, hoping for continued rallies shortly. 
  • Analysts agree, and markets are pricing them as if the only way to go from here is up.
  • 5 stocks we like better than Knight-Swift Transportation

There's a blueprint behind every winning investment that tends to be forgotten during the good and easy times in the stock market. However, following a solid plan is being called for in today's environment. From 2020-2022, the VIX was more than 30%, meaning you could throw darts at a board and still come out winning overall.

Now that the VIX is at its lowest level since 2019, it is more important than ever to make sure you back those stocks with a good story behind them and a stampede of bulls giving them upward momentum. Today, a small group of stocks befit of that description, all found in the transportation sector.

Companies like Global Business Travel Group NYSE: GBTG, Canadian Pacific Kansas City NYSE: CP, and Knight-Swift Transportation NYSE: KNX have what it takes to bring your portfolio a bit of extra green days in the coming year, so do yourself a favor and stay awhile, you just might benefit from it.

Introducing a new wave 

You can imagine that when the best wealth managers and traders out there sit at a round table to decide the fate of some of the investment dollars they manage, they would want to make sure that they are exposed to the industries showing strengthening growth, right?

If you can see that, then it would be easy to see why markets are beginning to love these stocks, as the ISM Services PMI index has been quietly expanding. The transportation industry is the knight in shining armor, leading its way higher.


Because its twin brother, the manufacturing PMI index, has been in contraction lately, the United States GDP growth has been delivered by the services sector, and inside that pocket, the transportation industry has been pushing a quarter of increasing activity.

Knowing what you know now, it should be no surprise to see how a recovering economy will look directly to those companies that make 'getting around' faster and easier, whether it is for people or products themselves. This structural pillar of business activity will likely see a profit bump come next quarter.

As they say, a story without numbers is just a fairytale, and numbers without a tale is just a spreadsheet. You are here because MarketBeat delivers both sides to you, so here is what you have been waiting for:

BlackRock NYSE: BLK, Invesco NYSE: IVZ, and J.P. Morgan Chase NYSE: JPM, arguably the masters of the universe, have been investing in these companies as they understand what the future of the industry holds. But is everyone else on board?

Hurry to the wave

Global Business Travel saw BlackRock increase its stake by 1,169% in August; talk about being able to see far into the future! Invesco bumped its Canadian Pacific position by 21.7% in November, with J.P Morgan adding 5.1% to its Knight-Swift investment. 

The rest of the market is piggybacking on these trades, as the evidence suggests. When a small group of whales, like these banks, make a move, the market always shows where they left their breadcrumbs that lead to the whole cake. Understanding the language is the bridge between them.

In plain English, markets are loving these stocks. How can you know? Start by taking the average forward price-to-earnings ratio for the industry. This 15.7x multiple seeks to value the next twelve months of earnings from the group as a whole.

Taking that benchmark value, anything above can be considered a premium stock (expensive for a reason), and anything above a cheap stock (cheap for a reason). Analysts will come to verify whether they should be trading where they currently are. 

Global Business Travel trades at a 74.6x multiple, a 376% premium to the industry, and for good reason. Analysts see a price target of $8.7 for the stock, calling for a 45.0% rally from today's prices to meet it. A bank and industry favorite indeed.

For Canadian Pacific, a 22.1x multiple paces it 40.7% above the industry, with analysts shooting for a 30.3% upside from where it currently trades. With Kight-Swift commanding a 16.3% premium, its price targets reflect a decent 11.8% upside. 

Notice how the more expensive the stock is, the more bullish analysts turn towards it? Remember, it's 'expensive' for a reason; just like better products and services call for higher price tags, so do the best stocks.

Pick and choose, but the answer is clear: whichever way you go, even in a low VIX environment, you have a double-digit upside backed by the larger economy at your fingertips.

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Should you invest $1,000 in Knight-Swift Transportation right now?

Before you consider Knight-Swift Transportation, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Knight-Swift Transportation wasn't on the list.

While Knight-Swift Transportation currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
BlackRock (BLK)
4.5048 of 5 stars
$810.66+0.1%2.47%22.20Moderate Buy$785.73
Invesco (IVZ)
4.6027 of 5 stars
$15.41+0.8%5.19%-20.82Hold$17.15
JPMorgan Chase & Co. (JPM)
4.2172 of 5 stars
$185.89+0.8%2.26%11.46Moderate Buy$179.11
Global Business Travel Group (GBTG)
1.3732 of 5 stars
$5.99flatN/A-13.61Moderate Buy$9.00
Canadian Pacific Kansas City (CP)
4.0708 of 5 stars
$85.01+0.1%0.67%27.07Moderate Buy$92.94
Knight-Swift Transportation (KNX)
3.7254 of 5 stars
$56.32+0.8%1.14%42.35Moderate Buy$63.00
Compare These Stocks  Add These Stocks to My Watchlist 

Gabriel Osorio-Mazilli

About Gabriel Osorio-Mazilli

  • gosoriomazzilli@gmail.com

Contributing Author

Value Stocks, Asian Markets, Macro Economics

Experience

Gabriel Osorio-Mazilli has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Value investing, long/short trading, options, emerging markets

Education

CFA Level I candidate; Goldman Sachs corporate training; independent courses

Past Experience

Analyst at Goldman Sachs, associate at Citigroup, senior financial analyst in real estate


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