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The transportation and logistics scene could really start to heat up again as the consumer starts spending a little more at digital retailers again. In fact, e-commerce has actually cooled off in recent years, as inflation and macroeconomic headwinds affected the average consumer's ability to spend on desirable (discretionary) goods. In fact, most of the things that are delivered tend to be nice-to-have goods rather than consumer staples.
While I'm not sure a Canadian recession can be ruled out yet, I think the transportation and logistics sectors could continue to hold up over the next three to five years.
In this article, we'll look at three deep-moat companies that I think could continue to rise in the coming years as they try to shrug off the last few years of turbulence.
TFI International
TFI International (TSX:TFII) is at a new all-time high of $201 per share at the time of writing. The incredible multi-year momentum appears to be strengthening, with the stock up a whopping 13% so far this year. At 25.67 times price to earnings (P/E), I don't consider LTL to be expensive, especially considering the impressive management team running the show.
Over the past five years, the trucker's stock has risen the most, skyrocketing more than 380%. This is a huge win for a company that isn't in the AI game at all. This shows that you don't need high technology to make big profits.
With a market capitalization just shy of $17 billion, I think TFI has plenty of room to continue rising. Sure, the trucking business may not be exciting, but just take a look at that graph and the impressive profit growth we've seen over the years!
CN rail
CN rail (TSX:CNR) is another great transportation company that is flirting with new all-time highs of around $178 per share. In fact, the rally from last year's lows has come quite suddenly. So, if you took profits during last year's initial drop, you're probably wondering if you should pick up the name again at higher prices.
With a P/E of 20.8 times, I still consider the rail titan to be pretty cheap for what you'll get. Of course, Canada's economy will influence the next course of CNR stock. In any case, the generous 1.9% dividend yield seems generous enough to hit the buy button before lower rates and capital appreciation push the yield closer to the 1% mark.
The company has been operating quite efficiently lately, thanks in part to several initiatives introduced by its relatively new top boss. All things 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 the time of writing. The stock has had a good run lately, rising more than 62% from its 2022 lows. Although the logistics company has faced a hostile environment, I would say management is starting to understand the climate better.
As FedEx looks to build on its recent strength and pole vault beyond modest expectations, the stock may get too cheap here, around $240 per share.
