3 Transport-Service Stocks to Bet on Despite Industry Hiccups

Industry Overview - The Zacks Transportation-Services industry is experiencing challenges such as inflation-induced elevated interest rates, weak freight rates, and supply-chain disruptions [1][3] - Companies in this industry provide logistics, leasing, and maintenance services, focusing on global logistics management and third-party logistics solutions [2] Current Trends - Supply-chain disruptions and weak freight rates continue to negatively impact the industry, with the Cass Freight Shipments Index declining by 1.8% month-on-month in June, reflecting a downward trend over seven of the last nine months [3] - Companies are focusing on cost-cutting measures to improve productivity and efficiency amid high inflation, particularly in labor, freight, and fuel costs [5] Financial Performance - The industry has underperformed compared to the broader S&P 500 and Transportation sector, declining by 13.7% over the past year, while the S&P 500 has risen by 17.5% [9] - The industry's earnings estimate for 2024 has decreased by 36% since the end of April, indicating a negative earnings outlook [8] Valuation Metrics - The industry is currently trading at a forward price-to-sales ratio of 1.84X, compared to the S&P 500's 4.87X and the sector's trailing 12-month P/S of 1.75X [10] Shareholder Returns - Companies like Expeditors International and Matson have announced dividend increases, reflecting their financial strength and commitment to rewarding shareholders [4] Investment Opportunities - C.H. Robinson, Matson, and Expeditors International are highlighted as potential investment opportunities, with C.H. Robinson showing a 31% gain over the past six months and Matson gaining 34.4% in the past year [13][16][17]