The transport and logistics scene could really start to heat up again as the consumer begins spending a bit more on digital retailers again. Indeed, e-commerce has really cooled off in recent years, as inflation and macro headwinds took a hit on the average consumer’s ability to spend on nice-to-have goods (discretionaries). Indeed, most of the stuff that’s delivered tends to be nice-to-have goods rather than consumer staples.
Though I’m unsure you can count a Canadian recession out of the cards just yet, I think transport and logistics plays could continue to be resilient over the next three to five years.
In this piece, we’ll look at three wide-moat firms that I think could keep on chugging higher over the coming years as they look to shrug off the past few years of turbulence.
TFI International
TFI International (TSX: TFII) is at a fresh all-time high of $201 per share at the time of writing. The incredible multi-year momentum seems to be going strong, with shares rising a whopping 13% year to date. At 25.67 times trailing price to earnings (P/E), I don’t view the less-than-load (LTL) trucker as expensive, especially when you consider the impressive management team running the show.
Over the past five years, shares of the trucker have chugged higher, soaring over 380%. That’s some serious gain for a firm that’s not at all in the artificial intelligence game. This goes to show that you don’t need high-tech for high gains.
With a market cap just shy of $17 billion, I think TFI has ample room to keep chugging higher. Sure, the business of trucking may not be exciting, but just have a look at that chart and the impressive earnings growth we’ve seen over the years!
CN Rail
CN Rail (TSX: CNR) is another magnificent transport firm that’s flirting with new all-time highs of around $178 per share. Indeed, the spike off last year’s lows has come quite suddenly. So, if you took profits during last year’s initial slump, you’re probably wondering if you should get back into the name at higher prices.
At 20.8 times trailing P/E, I still view the rail titan as pretty cheap for what you’ll get. Of course, Canada’s economy will influence CNR stock’s next course. In any case, the generous 1.9% dividend yield seems bountiful enough to hit that buy button before lower rates and capital appreciation drives the yield closer to the 1% mark.
The company has been operating quite efficiently lately, thanks in part to various initiatives put forth by its relatively new top boss. All considered, CNR stock looks like a winner poised to keep winning.
FedEx
Finally, we have FedEx (NYSE: FDX), which trades at 14.3 times trailing P/E at writing. Shares have been on a hot run of late, surging over 62% from its 2022 lows. Though the logistics firm has dealt with a harsh environment, I’d argue management is starting to get a better grasp of the climate.
As FedEx looks to add to recent strength and pole vault past modest expectations, shares may prove too cheap right here at around $240 per share.
