<div id="readability-page-1">Many investors find transportation stocks unique due to their inherent qualities and vital role in the economy. Whether it’s people or goods, transportation is a fundamental service with demand that tends to be resilient, even in softer markets. Likewise, this industry is essential for economic growth, which means that its constituents tend to grow in line with the economy. With the U.S. economy posting GDP growth of 2.8% in the three months to June and beating expectations, the outlook on transportation stocks remains robust. In fact, transportation stocks could offer many buying opportunities today, given that they have lagged behind the market over the past year. The iShares U.S. Transportation ETF (BATS:IYT), the largest pure-play transportation ETF, has underperformed, remaining relatively flat compared to the S&amp;P 500. The S&amp;P 500 itself has surged by about 20% during this period. With the economy thriving yet transportation stocks lagging behind, it’s likely that many names in the space are undervalued. In this article are three top transportation stocks that stand out for their qualities and compelling valuations. <h2>Old Dominion Freight Line (ODFL)</h2> <div id="1589468"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="169" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: Andriy Blokhin / Shutterstock.com</div>Let’s start with Old Dominion Freight Line (NASDAQ:ODFL), which is a leading less-than-truckload carrier that focuses on regional and national freight transportation. Over the years, the company has built a reputation for reliability, efficiency and superior customer service. By adjusting its business model to specialize in providing high-quality, cost-effective LTL shipping solutions, while consolidating smaller shipments into a single truckload, Old Dominion has managed to optimize deliveries and reduce costs. This strategy, besides improving the company’s operational efficiency, also offers significant value to clients, which has, in turn, led to exceptional growth. Specifically, over the past decade, Old Dominion’s revenues have grown at a compound annual growth rate (CAGR) of 9.6%. Its earnings-per-share has grown at an even more impressive CAGR of 21.6% over the same period, reflecting operating efficiencies. The company’s performance has also been strong recently, with its Q2 report showing a 6.1% increase in revenues and a notable 11.3% increase in EPS to $1.48. At 36x this year’s expected EPS, the stock might not seem cheap, but when you consider its outstanding track record and strong future prospects, it’s reasonable that the market has attached a premium multiple to this name. <h2>Union Pacific Railroad (UNP)</h2> <div id="1081092"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="165" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: Shutterstock</div>Next up, we have Union Pacific Railroad (NYSE:UNP), one of the largest freight rail networks in the U.S., operating over 32,000 miles of track across 23 states. The company specializes in transporting a diverse range of goods, including coal, industrial products and agricultural commodities. Its vast rail network provides vital connectivity between ports, production hubs and markets, making it a critical infrastructure. What’s interesting about Union Pacific is that it benefits from operating in an oligopolistic industry, where a few large players dominate the market, barricading competition and allowing for stable pricing power. This market structure enables Union Pacific to maintain high operational efficiency and pricing leverage. Evidently, while the company’s revenues have been more or less stable over the past decade, its EPS has grown at a CAGR of 8.3% over this period. Wall Street expects EPS of $11.15 this year, implying a year-over-year growth of 8.5% and a P/E of 22x based on the stock’s current price. While this multiple may seem somewhat rich, it actually presents an opportunity, given that consensus estimates point to an acceleration to the double-digits over the medium term. Also, Union Pacific’s moat certainly deserves a premium itself. Hence, I wouldn’t mind the stock’s current valuation too much. <h2>Expeditors International of Washington (EXPD)</h2> <div id="1975043"><img src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="300" height="169" original-src="https://imageproxy.pbkrs.com/https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif"/>Source: shutterstock.com/By yuttana Contributor Studio</div>Last on my list of transportation stocks is Expeditors International of Washington (NYSE:EXPD), a leading player in the global logistics and freight forwarding industry with a robust reputation for delivering comprehensive supply chain solutions. The company has carved out a significant niche by specializing in air and ocean freight forwarding, customs brokerage and distribution management. Overall, it excels in orchestrating the complex logistics of international trade, ensuring goods move smoothly from origin to destination. One of Expeditors’ key competitive advantages is its extensive global network, which spans major trade routes and markets worldwide. It enables the company to offer efficient, end-to-end logistics solutions tailored to the needs of diverse industries, which has powered excellent growth over the years. Specifically, the company’s EPS has grown at a CAGR of 11.6% over the past decade, with current industry dynamics pointing to strong momentum moving forward. Another notable aspect of Expeditors is its impressive dividend growth history. Despite the industry’s rather cyclical nature, Expeditors’ solid cash flows and consistent growth have allowed the company to grow its dividend every year over the past 29 years. Consequently, the company is a member of the elite group of 68 stocks known as Dividend Aristocrats. On the date of publication, Nikolaos Sismanis did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. Nikolaos Sismanis is a professional research analyst with five years of experience in the field of equity research and financial modeling. Nikolaos has authored over 1,000 stock-related articles that focus on uncovering deep value opportunities, identifying growth stocks at reasonable valuations, and shining a spotlight on overlooked international equities. </div>

EXPD

Transportation stocks have lagged behind the market but offer buying opportunities. Three top transportation stocks to consider are Old Dominion Freight Line (ODFL), Union Pacific Railroad (UNP), and Expeditors International of Washington (EXPD). ODFL has shown exceptional growth with revenues and EPS increasing. UNP benefits from operating in an oligopolistic industry and has stable pricing power. EXPD specializes in global logistics and freight forwarding with a strong reputation. These stocks have strong future prospects and may be undervalued.

The Top 3 Transportation Stocks to Buy Now: Summer 2024