Transportation and logistics are the lifeblood of the global economy, but in recent years, these sectors have hit some serious bumps in the road. Soaring fuel prices and stubborn inflation have piled on the pressure, making life tough for companies trying to keep goods moving. The shockwaves from post-pandemic monetary and fiscal policies only made matters worse, scrambling consumer habits and snarling supply chains.
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But the outlook is starting to change in transportation and logistics, and Baird analyst Daniel Moore explains why.
“How the remainder of 2025 unfolds remains uncertain, but the conditions that typically precede a turn are largely in place,” Moore said. “Capacity is tightening, trucking rates appear to have finally found a floor, inventories are being drawn down and one or more demand catalysts may be in motion. We believe the House version of the One, Big, Beautiful, Bill Act offers a blend of business and household incentives that aligns with the kind of stimulus that has historically marked the beginning of a freight recovery.”
“Additionally,” the analyst added, “with Chairman Powell’s term ending in early 2026, we believe the Trump administration is likely to appoint a more dovish successor that reflects a preference for accommodative policy and a pro-growth rate stance.”
Against this backdrop, Moore goes on to choose two hot picks in the field, stocks that are positioned to outperform as the logistics industry adapts to a potential turn in the second half of the year. We’ve opened up the TipRanks database to look up the broader Wall Street view on both of his picks; here are the details.
Hub Group (HUBG)
The first of Baird’s picks that we’ll look at here is Hub Group, a third-party logistics (3PL) firm that has been in business since 1971. Hub Group offers its customers a complete range of services across transportation and logistics management. These include dedicated trucking, with fleet management, 24/7 support, and supply chain efficiencies; asset trucking, providing high-quality trucks and equipment on demand; truck brokerage services, for cost-effective management and timely delivery of all types of freight; and intermodal transport, when loads need to switch between truck and rail transport. The company’s logistics management solutions are designed to streamline the process and save on costs, from freight consolidation to international shipping and down to the final mile and delivery.
Hub Group offers its services to customers from a wide range of industries and can tailor its shipping services and modes to meet the needs of any client. The company can handle bulk goods such as rolled industrial papers; fragile goods such as glass; finished industrial durable goods, such as automobiles; and even food and beverages. Hub Group boasts that it has the industry expertise and worldwide network to create custom solutions, meeting the idiosyncratic needs of any customer.
In the last reported quarter, 1Q25, Hub Group’s top line came to $915 million, missing the forecast by $48 million and falling 8.5% year-over-year. At the bottom line, however, the company beat expectations; the 44-cent EPS was a penny per share better than had been anticipated. The company ended Q1 with $141 million in cash available, after spending only $19 million on capital expenditures in the quarter.
For Baird’s Moore, this company stands out for its strong leadership. He sees Hub Group as a company capable of weathering headwinds, and writes of it, “We believe Hub Group stands out as one of the most compelling opportunities for mix-driven growth and margin expansion in the sector. Under the proven capable leadership of Phil Yeager and a strengthened board – highlighted by the addition of Gary Yablon – we believe the company is well positioned to navigate and capitalize on opportunities. This confidence is underpinned by a flexible balance sheet, conservative leverage (net debt/EBITDA of 0.8x) and over $300 million in full-year 2025 free cash flow, which together provides the foundation for a disciplined and opportunistic capital allocation strategy. With a recently adopted capital allocation model that balances shareholder returns with strategic reinvestment, we believe the shares of Hub present potential investors with near term value and a compelling path to long-term growth.”
Given this stance, Moore rates HUBG shares as Outperform (i.e., Buy). His price target of $44 suggests that the stock has a one-year upside potential of 25.5%. (To watch Moore’s track record, click here)
Overall, this logistics stock gets a Moderate Buy rating from the Street’s consensus, based on 11 recent reviews that include 4 to Buy and 7 to Hold. The shares are priced at $35.07 and have an average target price of $40, implying that a gain of 14% lies ahead for the stock this coming year. (See HUBG stock forecast)
Knight-Swift Transportation (KNX)
Next up on our list is Knight-Swift, an industry leader in the field of full truckload shipping. The company, in its modern form, was founded in 2017 by the merger of Swift Transportation and Knight Transportation. Today’s Knight-Swift is based in Phoenix, Arizona, has a market cap of $7.5 billion.
The company derives its revenue mainly from its truckload and less-than-truckload (LTL) shipping services. Knight-Swift operates a modern trucking fleet of approximately 19,000 tractors and 58,000 trailers, and employs over 24,000 people in its operations. The company can provide shipping and logistics solutions, including intermodal solutions, across North America, and can provide facilitated cross-border transport to both Canada and Mexico.
These activities brought Knight-Swift a total of $1.82 billion in revenue during 1Q25. This figure was flat compared to the first quarter of 2024, but it beat the forecast by nearly $26 million. The company realized a 28-cent non-GAAP EPS, 4 cents per share better than had been expected.
The company’s full truckload shipping business generated $1.05 billion of the revenue total, slipping 4.2% year-over-year – but this was more than compensated by the LTL business, which saw revenues increase by over 26% in the quarter, to reach $305 million. Knight-Swift’s logistics services also saw strong year-over-year gains in the first quarter, growing by almost 12% and reaching $141.6 million.
Checking in again with Moore, presenting the Baird view of KNX, we find that the analyst remains upbeat on the stock despite the headwinds that have pressed on it. Moore writes, “Extreme weather in 1Q25 weighed heavily on industry results, creating a starting point that probably should have been adjusted higher. When coupled with tariff-related concerns in May, which assumed an air-pocket in demand, we believe these factors reduced expectations to a level that the company should comfortably exceed. While we recognize that this backdrop may not exclusively apply to Knight, we believe it offers one of the best near-term setups.”
Looking ahead, the analyst goes on to explain why KNX is in a strong position to deliver positive results in coming months, adding, “More importantly, we view Knight-Swift as arguably the best operator in the space – yet even they are not currently earning their cost of capital, which highlights the severity of this downcycle. With peak earnings power likely in the $6 range, we believe the current return profile of Knight and the broader industry is unsustainable, and that the stock’s price offers investors an attractive entry point.”
Moore gives KNX shares an Outperform (i.e., Buy) rating, which he complements with a $55 price target that points toward a 16.5% upside potential in the next 12 months.
The 15 recent analyst reviews here break down to 11 Buys and 4 Holds, for a Moderate Buy consensus rating. The shares are priced at $47.20, with an average price target of $51.93, suggesting an upside of 10% on the one-year horizon. (See KNX stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.