After a few quarters of lackluster growth in the United States economy, the past quarter's GDP figures rose to beat economist expectations and even bring about expansion on real terms (that is, adjusting for inflation). A 4.9% growth rate successfully shrugged off interest rate hikes from the FED, showing resilient momentum to be continued.

But what does an expanding economy mean exactly? Well, more consumption and business activity are sure to benefit some sectors while also applying pressure on others. Namely, there are a few names that will likely be called upon to support the coming wave of activity.

There's nothing new under the sun, which is why it should make absolute sense for you to find out that analysts have been expecting above-average growth for names like XPO (NYSE: XPO), Saia (NASDAQ: SAIA), and even J.B. Hunt Transport Services (NASDAQ: JBHT). After all, business activity can only occur with a strong logistics network, right?

Upside Perception

You can look at the transportation stocks universe, where you can get a clearer idea as to where the market is valuing not only the sector itself but, more importantly, where these top logistics names are trading in comparison to their sector peers.

Taking the forward price-to-earnings ratio for the industry, which seeks to place a value on the next twelve months of expected earnings, an average valuation of 19.5x is placed on this segment of the economy. Now, placing these names relative to the average will be critical in your due diligence.

XPO is trading at a 23.0x multiple, implying a premium valuation of 18.0% over the sector, which is not bad. For Saia, a 22.7x valuation will slap a premium of 16.3%, which is decent. Finally, J.B. trades for a 20.0x multiple, calling for a premium of nearly 3.0% over the industry.

Why is this good news? Just like any other product or service, you would only want to go with the 'cheapest' option if the quality of delivery was superior. Stocks are looked at similarly by the market, where a willingness to overpay for a name must be due to higher quality or faster growth.

And growth there is! Analysts expect earnings per share to jump by as much as 31.3% over the next twelve months for XPO; no wonder it has been rewarded the largest premium in the sector.

Saia and J.B. are expected to bump their EPS by 20.9% and 16.9%, a significant advance for businesses that operate in an industry that is not mainly known for its growth bumps.

Tailwinds at Play

Now that the market expectation is set, the overall sentiment around these names is that they should be trading higher than the prices being reflected today. Now, due diligence would only be complete by checking how things are going inside the businesses themselves.

According to XPO's third quarter 2023 earnings press release, the business grew its revenue by 2.0%, which is nothing to write home about, obviously. However, the meat of the deal is found in the management commentary regarding the state of U.S. shipping.

They outpaced seasonality costs by 3.7% and saw gains in volume and market share, so it looks like any headwind they faced had come from fuel costs. No wonder oil had been rising the whole time.

Saia tells a similar story, with operating cash flows expanding by as much as 20.9% over the year and revenues advancing by 6.2% during the same period. Management attributes these improvements to rising volumes in shipments, which were also offset by rising fuel costs.

When the time came for J.B. to showcase its results, this one didn't shy away from bad news. Being a more concentrated business model, contractions were seen across the board for the third quarter. However, there's a critical bit of information to be taken away from it all.

Considering the cyclical slowdowns in this business model, management has taken advantage of price declines to buy back some stock, understanding that the future is filled with tailwinds that will likely push the industry forward.

Up to $51 million was used to buy back 267 thousand shares during the quarter, with $416 million remaining in the program to deploy into further buybacks.

XPO and Saia ride the momentum they have been building since the past quarter, a trend that will likely continue to expand with the growing economy. For J.B., you now have a chance to ride a turnaround play, one that management is confident in.