With the summer conference season in full swing, investors will head to Chicago for the Deutsche Bank Industrials conference this week. Deutsche Bank A.G. (NYSE: DB) analysts expect investors to be focused on freight demand at the upcoming conference, given ongoing global macroeconomic uncertainty. While freight trends were soft in April and early May (due in part to a harsh winter and cold spring this year) freight volumes strengthened into month end, and the trucking supply demand dynamic remains in balance.
They note in current their report that June is the most important month in the second quarter, as the Memorial Day holiday typically marks the beginning of a sequential pick up in freight demand into the end of the quarter. Here are the top transportation and shipping stocks to buy at Deutsche Bank.
FedEx Corp. (NYSE: FDX) recently raised shipping rates for its freight division by an average of 4.5% in the United States, Canada and Mexico. Deutsche Bank carries a $125 price target for the stock. The Thomson/First Call estimate is at $117. Investors receive a small 0.6% dividend.
United Parcel Service Inc. (NYSE: UPS) is the number one delivery company in the world by actual sales volume. The company is more domestically oriented than FedEx, with just 22% of its revenues coming from international business. Deutsche Bank has a $99 target, and the consensus for the stock is $95. Investors receive a 2.0% dividend.
Norfolk Southern Corp. (NYSE: NSC) is a top railroad name on the list of stocks to buy. Norfolk Southern has a good combination of strong free cash flow generation and manageable financial leverage, and it is trading at attractive valuation multiples relative to peers. The Deutsche Bank target price is $85, the same as the consensus target. Investors are paid a 2.6% dividend.
Union Pacific Corp. (NYSE: UNP) is the largest of the publicly traded railroads, with a market cap of almost $73 billion. The company operates more than 31,000 miles of track linking the West Coast to the Gulf Coast. Deutsche Bank has a $164 target, while the consensus is at $159.50. Investors are paid a 1.7% dividend.
XPO Logistics Inc. (NYSE: XPO) is growing at more than 100% year-over-year through acquisitions and cold starts. It has tripled revenue since Bradley Jacobs became the chief executive officer, and it is still less than 1% of the $50 billion truck brokerage business. The price target for the stock is $29, but the consensus is much lower at $21. The Deutsche Bank target is the highest on Wall Street and would represent a 65% move from current levels.
J.B. Hunt Transport Services Inc. (NASDAQ: JBHT) is a leading trucking stock to buy. The company recently hit a new 52-week high on large volume. Deutsche Bank has an $84 target, while the consensus is at $76.50.
Swift Transportation Co. (NYSE: SWFT) has been powered by its strong earnings growth of 325%. Shares have surged in price by 55.05% over the past year, outperforming the rise in the S&P 500 Index during the same period. Deutsche Bank has a $19 target, and the consensus is at $18.50.
Diana Shipping Inc. (NYSE: DSX) is the only dry bulk shipper to make the list. The company beat first-quarter estimates for revenues and earnings per share. Deutsche Bank has a $12 target, while the consensus is at $11.30.
Navios Maritime Acquisition Corp. (NYSE: NNA) may be the flyer of the group. The company has 36 vessels, 23 currently in the waters with an average age of 4.7 years, with the other 13 to be delivered (eight this year, five next year, nine of which are being built brand new). The Deutsche Bank target is $5 and the consensus is at $4.63.
If an anticipated second-half growth spurt in the domestic and global economy takes place, transportation stocks will be a good place to have capital. The Deutsche Bank list has a selection of companies with solid track records, that are poised to succeed if the economy stays firm and shows some improvement.