When it comes to sector rotation, transportation stocks have been big winners. Yet there’s no short-term fix for this massive global traffic jam.
We’ve been hearing about the supply chain crisis for a while now. But it’s hard to get a grasp of how massive this challenge is to set right. In 2021, exports from China to the U.S. rose almost 29% to a massive $755 billion.
And that’s one year of trade to just the U.S. China is also exporting goods all over the world.
What’s more, the supply chain just isn’t about getting ships to and from China. When a major exporter is having trouble moving goods by sea, air cargo is affected. So is rail shipping. This is a massive domino effect that affect how long it takes to get a package to your door or how long it takes to get chipsets to electronics manufacturers.
These stocks are in the middle of this and will be the solution, because now they have pricing power and they’re best of the only game in town.
- Costamare (NYSE:CMRE)
- Danaos (NYSE:DAC)
- Global Ship Lease (NYSE:GSL)
- GATAX (NYSE:GATX)
- PAM Transportation Services (NASDAQ:PTSI)
- TFI International (NYSE:TFII)
- ZIM Integrated Shipping Services (NYSE:ZIM)
Transportation Stocks: Costamare (CMRE)
When we talk about shipping issues, some people think about tankers. The “wet” tankers haul oil and other liquids. The “dry bulk” tankers ship iron ore, steel, coal, corn, etc.
We’re leaving them out of the equation for now. CMRE owns and operates container ships. They’re the ones you see on television (or on your screen) that have massive amounts of what look like trailers stacked impossibly high on decks.
These are the ships that are in high demand. And the ones that are tied up in docks or anchored off of ports waiting to be emptied. Whatever the issue, CMRE is making money whether they’re moored or moving.
CMRE stock has gained 40% in the past three months, 80% in the past 12 months. And it’s still trading at a price to earnings (P/E) ratio of below six. What’s more, it has 2.7% dividend to top it off.
This stock has an “A” rating in my Portfolio Grader.
Danaos (DAC)
Another containership company, DAC charters its large containerships on long-term contracts. It’s been in the business since 1972, so it has plenty of historic first-hand knowledge on the ups and downs of the industry.
Generally the charters are staggered so that as leases end they can be chartered to the highest paying customer but all the ship leases aren’t ending at one time. That would leave the company in a bad spot if the economy is stuck in a recession and prices for shipping are at a low tide. This way they can continue to run all their ships at the best possible long-term pricing.
And its experience is paying off. DAC stock has risen 47% in the past three months and nearly 105% in the past 12 months. Yet it’s still trading at a P/E of — this isn’t a typo — two. It also has a 2.9% dividend.
This stock has an “A” rating in my Portfolio Grader.
Transportation Stocks: Global Ship Lease (GSL)
Like the other two transportation stocks I’ve reviewed, GSL is a containership company that leases its ships on long-term leases as well as fixed rate charters.
Its $1 billion market capitalization puts it about half the size of DAC, but it’s a relative newcomer to the business, starting operations in 2007.
What’s more GSL also adds a few more services to its offerings. It provides crews, maintenance, dry docking, and regulations certifications. This can be very helpful in keeping the ships in the best condition possible.
The stock hasn’t exactly performed up to its larger competitors. But it’s close. GSL stock has gained 105% in the past 12 months, and it’s up 30% in the past three months. It has a 3.5% dividend.
This stock has an “A” rating in my Portfolio Grader.
GATAX (GATX)
Before you think all the stocks here are containership companies, it’s time to change gears. GATAX has been around in one form or another since 1898 and is headquartered in the good ol’ US of A.
GATAX is primarily a railcar company. It leases railcars across the US and Europe. That means it’s a key beneficiary of the cargo on the containerships once they get offloaded in ports. They pick up the containers at the shipyard and drop them on railcars who then send them to a railyard in the US for transport to tractor trailers that then send to their next destination points.
But GATX doesn’t stop there. It also operates five liquified natural gas (LNG) vessels with a small Norwegian shipping firm, Norgas.
GATX stock has gained 20% in the past three months, and 38% in the past 12 months. That may seem like peanuts compared to the previous transportation stocks here, but this business is going to be solid for a long time without the cyclicality that global shipping traditionally comes with. And given Europe’s need for LNG now, those five ships should stay very busy for quite a while.
This stock has an “B” rating in my Portfolio Grader.
Transportation Stocks: PAM Transportation Services (PTSI)
Starting with five used semis and 15 trailers in 1980, PTSI now runs 2000 tractors and 6000 trailers across the U.S. lower 48 and parts of Canada. Based in Arkansas, PTSI has become a solid mid-sized trucking company in the U.S.
This is a great time to be in the trucking business, if of course you can find drivers. That has been the biggest challenge, since the work is certainly there.
While getting goods into port has been a challenge, it’s similar to when a weather system shuts down an airport in one part of the country. All the planes across airlines become affected. The same happens with trucking. Once the scheduling is screwed up, it’s tough to figure out where to be and when. But companies are paying big money to have trucks on the ready.
PTSI stock is up 130% in the past 12 months because of this, yet the stock is trading at a PE of 11. Hop on in pardner.
This stock has an “A” rating in my Portfolio Grader.
TFI International (TFII)
Supply chain issues aren’t unique to the U.S., although the U.S. is a huge importing nation and the largest economy on the planet. That doesn’t mean similar challenges aren’t presenting opportunities with other transportation stocks.
TFII is a Canadian trucking and logistics company. But it operates in Canada, US, and Mexico. And its $10 billion market cap makes it one of the biggest trucking companies in North America. Although given all the bottleneck these days, the logistics piece of the business is a significant value since it can help make more efficient use of its assets. And it can be a service unto itself.
Also, its transnational routes mean if something can’t get shipped, it’s possible it can moved by truck. That more business opportunities in a tight market at premium prices.
TFII stock has gained 50% in the past 12 months, trades at a P/E of 17, and has a 1% dividend.
This stock has an “A” rating in my Portfolio Grader.
ZIM Integrated Shipping Services (ZIM)
While ZIM has been in operation since 1945, it only went public last year. It’s an Israel-based shipping and logistics company that also has a North American headquarters in Norfolk, Virginia, a significant East Coast port city.
ZIM has a market cap that’s over $10 billion, which makes it one of the largest shipping companies in the world. That simply magnifies the opportunities available for the company since it’s dual headquarters means it can operate in Africa, Europe, and North America relatively easily from its bases of operation.
Although nowadays, it’s ships are sailing the seas full of cargo and don’t get much downtime. ZIM has gained a whopping 200% in the past 12 months, almost 34% in the past three months. Its dividend is more than 11% and get this, its PE is still below 2.
This stock has an “A” rating in my Portfolio Grader.
On the date of publication, Louis Navellier has positions in CMRE, DAC, GSL, PTSI, TFII, and ZIM in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.