In this article, we will discuss 10 best TaaS stocks to buy now. If you want to skip our detailed analysis of the TaaS industry, which highlights key trends and major players, you can directly go to 5 Best TaaS Stocks to Buy Now.
TaaS or Transportation as a Service is one of the fastest growing sectors in the current market. It refers to the integration of multiple transportation services such as ride-sharing, bike, and car rentals into a single digital on-demand mobility platform. The services can be acquired through subscriptions or a pay-as-you-go model.
Global Impact of TaaS
At the World Economic Forum, General Motors Company (NYSE:GM) CEO Mary Barra said, “I believe the auto industry will change more in the next five to 10 years than it has in the last 50.” This is mostly true because of the advent of TaaS. The value of the global Transportation as a Service market was $3.3 billion in 2021, and it is expected to grow to $40 billion in 2027, according to Market and Markets.
The global transportation industry saw a steep decline in 2020 due to the COVID-19 impact. However, given the roll-out of vaccinations, the industry started to go back to normal in 2021. For example, Uber Technologies, Inc. (NYSE:UBER) faced a loss of $1.8 billion in Q2 of 2020 as the COVID restrictions proved to be a big hurdle and resulted in bookings plummeting. However, in the first quarter of 2021, the company reported a 24% increase in bookings. FedEx Corporation (NYSE:FDX), on the other hand, saw a rise in its business during the pandemic. In addition, with the ease of lockdown in 2021, the stock price for the company tripled in a single quarter.
Tesla, Inc. (NASDAQ:TSLA) is trying to enter the TaaS industry very soon and is looking to adopt driverless vehicle technology. According to Global Equities Research analyst Trip Chowdhry, the company is working on “stealth projects” that will affect the TaaS industry in a major way.
Even with millions or billions of car enthusiasts in the world, the economic impact of TaaS is expected to disrupt the activities of car dealers. The average annual expenditure on maintaining a car is around $9,000. According to a report by RethinkX, an average American family is set to save around $5,600 per annum because of the TaaS industry. The amount is equal to adding 10% annual wage to a family.
Apart from all that, TaaS will have a positive global environmental impact. One of the biggest favorable impacts of the industry will be lesser traffic on the roads, resulting in lower carbon emissions. Moreover, TaaS companies are investing in greener electric cars. For example, Hertz Global Holdings Inc (NYSE:HTZ) has pledged to add 100,000 Teslas to its subsidiary, Hertz Corporation’s fleet. Some of the most notable TaaS players to watch include Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA).
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We did a thorough research of the Transportation as a Service industry and picked these stocks based on the hedge fund sentiment, analyst ratings, and other growth catalysts. The hedge fund sentiment around each stock has been taken from Insider Monkey’s Q4 2021 database of 924 hedge funds.
Best TaaS Stocks to Buy Now
10. GATX Corporation (NYSE:GATX)
Number of Hedge Funds: 14
GATX Corporation (NYSE:GATX) is a railcar leasing company with a fleet of around 150,000 across North America, Europe, and Asia. The company has returned more than 177% to its investors during the last decade.
GATX Corporation (NYSE:GATX) seems to be outperforming the transportation sector with a 2.1% return this year compared to the industry average of -13.8% YTD. The dividend yield of the company at 2.01% also exceeds the industry average of 1.17%. For the first quarter of 2022, GATX Corporation (NYSE:GATX) surprised its EPS estimates by 68.10%. However, the company missed its revenue estimates by $6.15 million after generating $316.6 million.
In the fourth quarter of 2021, 14 hedge funds remained bullish on GATX Corporation (NYSE:GATX). Mario Gabelli’s GAMCO Investors held the most significant stake with 1.686 million shares worth $175.7 million, making up 1.5% of the fund’s portfolio.
Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA) are some of the companies along with GATX Corporation (NYSE:GATX) that investors should be attentive towards.
9. GXO Logistics, Inc. (NYSE:GXO)
Number of Hedge Funds: 37
GXO Logistics, Inc. (NYSE:GXO) is an American logistics company headquartered in Connecticut. The company’s operations take place in close to 900 warehouses and approximately 210 million sq ft of facility space. On March 16, GXO Logistics, Inc. (NYSE:GXO) announced the deployment of a fleet of autonomous robots across the U.K and the Netherlands.
According to GXO Logistics, Inc. (NYSE:GXO)’s first quarter 2022 results, the company generated $2.1 billion in revenue, compared to $1.8 billion in the same quarter of the previous year. On top of that, the net income credited to the company was $37 million, up from $14 million in the first quarter of 2021.
GXO Logistics, Inc. (NYSE:GXO) shows a promising future and a strong balance sheet. The company had a 19% organic revenue growth according to its first-quarter 2022 reports. This makes it the fifth consecutive quarter for the company to have a double-digit organic growth. Additionally, the estimated EBITDA for GXO Logistics, Inc. (NYSE:GXO) is expected to be around $730 million in 2022, with an expected increase to $823 million the next year.
“GXO Logistics was recently spun off from its parent company, XPO Logistics, to become the world’s second-largest contract logistics provider. The quality of this business is underappreciated by the market because it had been embedded within XPO and lacked visibility. We believe the stock will receive a higher valuation as its attributes become more widely recognized, including revenue growth of high single to low double digits, +90% retention rate, business visibility from multiyear contracts, and +20% return on invested capital. GXO’s superior business makeup also adds to its appeal, with 30% of sales coming from automation and robotics, compared to the industry average of 5%. E-commerce and technology drive 50% of total revenue.”
8. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Funds: 27
Avis Budget Group, Inc. (NASDAQ:CAR) is an American car rental company based in New Jersey. The company is a solid growth stock as its EPS is expected to grow by 45.2% by the end of the year, compared to the industry average of 14.3% growth. In addition, Avis Budget Group, Inc. (NASDAQ:CAR)’s cash flow growth has been 10.5% over the past 3-5 years.
Avis Budget Group, Inc. (NASDAQ:CAR) outperformed the analysts’ estimates by a huge margin in the first quarter of 2022. The EPS reported by the company was $9.99, while the consensus was at a meager $3.54. In the same quarter, the company generated a revenue of $2.43 billion, which was $295.89 million more than the forecasts.
On May 4, Deutsche Bank analyst Chris Woronka raised the price target for Avis Budget Group, Inc. (NASDAQ:CAR) from $193 to $238 with a Hold rating on the company shares. According to the analyst, “ownership and trading dynamics in place” remain to be the main driving force behind the stocks in the foreseeable future.
Here is what Broyhill Asset Management had to say about Avis Budget Group, Inc. (NASDAQ:CAR) in their fourth-quarter 2021 investor letter:
“Avis surged 166% during the final two quarters of the year. The company hit a new record for quarterly EBITDA – third quarter EBITDA was higher than any full year in Avis history – while buying back nearly $1B of stock and announcing another $1B increase in their repurchase authorization. Shares hit an intra-day peak of $545 after reporting earnings, ultimately closing at $357, more than doubling the prior close. Frenzied retail trading, prompted by management commentary around electric vehicles adoption, prompted a dozen trading halts throughout the day. The mania grew so intense that TD Ameritrade stopped allowing short sales in Avis, as short interest represented ~ 30% of the float.”
7. Expeditors International of Washington, Inc. (NASDAQ:EXPD)
Number of Hedge Funds: 29
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is an American logistics company. On May 2, the company’s Board of Directors announced a 6-month cash dividend of $0.67 per share. The dividend is payable on June 15, to shareholders of record as of June 1, 2022.
Expeditors International of Washington, Inc. (NASDAQ:EXPD) has been quite consistent in beating its revenue and EPS estimates for the last eight quarters. For the first quarter of 2022, the company beat estimates by 21.34% at $2.37, compared to Street forecasts of $1.71. Additionally, Expeditors International of Washington, Inc. (NASDAQ:EXPD) generated revenue of $4.66 billion, compared to the $4.26 billion estimates.
According to Insider Monkey’s database, 29 hedge funds held stakes in Expeditors International of Washington, Inc. (NASDAQ:EXPD) as of the fourth quarter of 2021. The number was 26 in the previous quarter. The largest stake was owned by First Eagle Investment Management, with 2.4 million shares worth $250.8 million. In the same quarter, Renaissance Technologies increased its activity in Expeditors International of Washington, Inc. (NASDAQ:EXPD) at a staggering 1026% percent and held the second most prominent stake in the company.
6. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Funds: 59
Union Pacific Corporation (NYSE:UNP) is a railroad holding company based in Utah. The company is a notable dividend stock as it shells out a dividend yield of 2.11%, compared to the industry average of 1.15% and the S&P 500’s yield of 1.57%. On May 12, Union Pacific Corporation (NYSE:UNP)’s Board of Directors announced a dividend increase of 10%. Over the last 5 years, the company has raised its dividends 4 times, with an average annual rate of 13.86%.
Due to the oil price hike, Union Pacific Corporation (NYSE:UNP)’s expenses increased by 16% in March 2022. Despite that, the company has returned $3.5 billion to its shareholders in the first quarter of 2022. The reported EPS of Union Pacific Corporation (NYSE:UNP) for the first quarter of 2022 was $2.57, beating the estimates by 0.16%. In the same quarter, the company generated a revenue of $5.86 billion, compared to the $5.76 billion estimates.
On April 22, Raymond James analyst Patrick Tyler Brown raised Union Pacific Corporation (NYSE:UNP)’s price target to $285 from $280 with a Strong Buy rating. According to the analyst, “improved service, the ESG benefits of rail, and a tight truck market could all yield a potent elixir, driving volumes, price, and earnings higher than contemplated.”
Union Pacific Corporation (NYSE:UNP), along with Uber Technologies, Inc. (NYSE:UBER), FedEx Corporation (NYSE:FDX), and Tesla, Inc. (NASDAQ:TSLA), are some TaaS stocks with strong growth catalysts.
ClearBridge Investments mentioned Union Pacific Corporation (NYSE:UNP) in their fourth-quarter 2021 investor letter. Here is what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
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Disclosure: None. 10 Best TaaS Stocks to Buy Now is originally published on Insider Monkey.