Top Three Transportation Stocks Rated 'Buy'

J.B. Hunt Transport Services, C.H. Robinson Worldwide and Canadian National Railway are rated 'buy.'
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BOSTON (

TheStreet

) -- As the economy picks up, transportation stocks will follow suit. Here are three that offer bullish prospects and a margin of safety.

J.B. Hunt Transport Services

(JBHT) - Get Report

is a domestic trucking firm that offers flatbed, refrigerated and dry-van transportation. Its return on equity, a key measure of profitability for investors, consistently exceeds the industry average.

Quarter

: First-quarter profit increased 22% to $37 million, or 29 cents a share, as revenue grew 17%. The operating margin narrowed from 7.9% to 7.7%. J.B. Hunt has $7.8 million of cash and $541 million of debt, equal to a debt-to-equity ratio of 0.8.

Stock

: J.B. Hunt has advanced 21% during the past year, trailing U.S. stock indices. It trades at a price-to-projected-earnings ratio of 19, on par with trucking peers. The shares are expensive based on book value and cash flow.

Consensus

: Of analysts covering J.B. Hunt, 14, or 58%, advise purchasing its shares and 10 recommend holding them.

Deutsche Bank

(DB) - Get Report

expects the stock to rise 40% to $48.

UBS

(UBS) - Get Report

predicts the shares will climb 29% to $44.

C.H. Robinson Worldwide

(CHRW) - Get Report

helps trucking companies find freight to haul.

Quarter

: First-quarter profit declined 1.6% to $84 million, or 50 cents, as revenue gained 23%. The operating margin narrowed from 8.1% to 6.6%. C.H. Robinson has $282 million of cash, equal to a quick ratio of 1.7, and no debt.

Stock

: C.H. Robinson has appreciated 9.1% during the past year, lagging behind benchmarks. It sells for a price-to-projected-earnings ratio of 23 and a price-to-sales ratio of 1.2, on par with logistics peers. It's expensive based on cash flow.

Consensus

: Of researchers following C.H. Robinson, 12, or 50%, rate its stock "buy", 11 rate it "hold" and one rates it "sell."

Bank of America

(BAC) - Get Report

foresees the stock at $72, leaving a potential 23% return.

JPMorgan Chase

(JPM) - Get Report

expects it to hit $70.

Canadian National Railway

(CNI) - Get Report

is a rail transporter throughout North America. During the past three years, it has boosted earnings per share 1.9% annually, on average.

Quarter

: First-quarter profit increased 21% to $511 million, or $1.08, as revenue widened 5.7%. The operating margin stretched from 28% to 30%. Canadian National has $748 million of cash and $6.3 billion of debt, equal to a debt-to-equity ratio of 0.5.

Stock

: Canadian National has returned 30% during the past year, beating the

S&P 500 Index

. It trades at a price-to-earnings ratio of 14, a 31% discount to the industry average. It's also cheap based on book value and cash flow, but expensive based on sales.

Consensus

: Of firms rating Canadian National, nine advocate purchasing its shares and 13 recommend holding them.

Credit Suisse

(CS) - Get Report

predicts the stock will gain 29% to $71.

BB&T

(BBT) - Get Report

forecasts that the shares will rise 23% to $68.

-- Reported by Jake Lynch in Boston.