TD Cowen names top trucking and logistics stocks amid rising costs

Investing.com -- TD Cowen has identified Knight-Swift Transportation and XPO, Inc. as its preferred picks in the trucking and logistics sector heading into earnings season, as the industry navigates elevated diesel prices and driver-related cost pressures.

The investment firm notes that trucking momentum remains primarily a supply-driven story, with driver safety-related issues working their way through the courts. Private trucking and logistics executives are showing incremental optimism for demand in the fourth quarter, with expectations for double-digit truckload contract rates in 2027.

Knight-Swift Transportation

TD Cowen favors Knight-Swift heading into earnings, noting that spot trends cooled through the third quarter as driver and energy costs build for truckload carriers. The firm highlights that private trucking and logistics executives are incrementally bullish on fourth-quarter demand. Despite near-term headwinds from rising operational costs, the company is positioned as a top pick in the sector. Driver availability continues to pressure truckload carriers, which TD Cowen expects to be a material cost headwind in the second half of the year.

XPO, Inc.

The firm also favors XPO into earnings, particularly noting that less-than-truckload carriers benefit the most from fuel surcharge revenues. TD Cowen expects XPO to modestly exceed expectations in the third quarter and offer above-seasonality margin progression into the fourth quarter as the company continues to drive company-specific initiatives. The investment firm views fuel headwinds in transports as largely understood heading into earnings season.

TD Cowen notes that diesel prices have trended above six dollars per gallon through September, up 14% month-to-date, 37% quarter-to-date, and hovering near all-time highs. The firm views the significant rise in diesel prices quarter-to-date as a moderate but notable impact on third-quarter earnings across the sector.

Dry van spot rates excluding fuel increased 2% through September as rate declines stabilized and freight demand showed some signs of seasonal improvement, according to the firm’s analysis.

Original Article

You May Also Be Interested In

• Tesla stock up as automotive gross margin improves, free cash flow turns positive
• Advisory firm lobbies SEC to end shareholder anonymity, eyes January push
• PHP patches critical flaw hitting 70% of websites; Cloudflare, others surge