We recently compiled a list of the 10 Best TaaS Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where Matson, Inc. (NYSE:MATX) stands against the other TaaS stocks.
Market experts opine that the transportation world is surrounded by tech-infused transformation, which creates significant opportunities for investors to go long on TaaS (transportation-as-a-service) stocks. The digital transformation that is being experienced by the transportation sector continues to make delivery services more accessible and customized.
As per Introspective Market Research, factors including the need for on-demand, affordable, and eco-friendly transport solutions are expected to drive the growth of the transportation-as-a-service market.
Technological advancements including self-driving cars are some of the prominent factors, with healthy improvement in connectivity. Smart cities and the application of loT, primarily in the transportation sector, should also act as contributing factors.
How Technological Advancements Will Drive Growth of the TaaS Market?
The TaaS market saw a transformative shift over the recent past, courtesy of the integration of Artificial Intelligence (Al) and Machine Learning (ML). Al-powered systems tend to optimize fleet operations by analyzing real-time and historical data, predicting vehicle demand, and suggesting efficient routes. ML algorithms focus on analyzing user behavior, preferences, and travel history to offer recommendations. Therefore, both the technologies, Al and ML, have transformed demand forecasting and predictive analytics.
As per Successive Digital, deep learning models, mainly Recurrent Neural Networks (RNNs) and Long Short-Term Memory (LSTM) networks, are proficient enough to capture temporal dependencies in data, which helps in demand forecasting. Notably, ML models like ARIMA (Autoregressive Integrated Moving Average) and Prophet are used to predict future demand by studying time-series data.
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Key Trends to Watch Out in 2025
One of the most important trends likely to drive the growth of the TaaS market in 2025 is the rapid adoption of EVs. The global push towards sustainability continues to support the growth of the EV market. Introspective Market Research believes that stringent emission standards set by governments and incentives provided for EVs continue to support the adoption. Furthermore, the development of battery systems focused on enhancing the driving range and cutting down the cost of EVs should make them affordable to consumers.
Next, Mobility as a Service (MaaS) integration should continue to fuel growth in the TaaS market. MaaS platforms focus on the convenience of users by offering a one-stop app where people can locate modes of transport such as buses, trains, bicycles, ride-hailing, etc. As per Introspective Market Research, the evolution of digital technologies like real-time data and analytics, mobile applications, and loT supported the growth of MaaS. These technologies focus on integrating and managing different forms of transport services.
Our Methodology
To list the 10 Best TaaS Stocks to Invest in According to Hedge Funds, we conducted extensive research and scanned through several online rankings. After getting an initial list of 25-30 stocks, we filtered out the ones having high hedge fund holdings. Finally, the shortlisted ones were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A processional line of imposing cargo ships in a large port, capturing the scope of the company’s ocean transportation business.
Matson, Inc. (NYSE:MATX)
Number of Hedge Fund Holders: 30
Matson, Inc. (NYSE:MATX) is engaged in the provision of ocean transportation and logistics services. The company employs advanced technology to streamline operations. Therefore, it focuses on emphasizing transportation networks.
Wall Street analysts believe that Matson, Inc. (NYSE:MATX)’s China service will continue to perform well, with elevated freight rates expected moving forward. They remain optimistic about continuing this momentum, leveraging its competitive advantages to drive further revenue growth.
In Q3 2024, within Ocean Transportation, Matson, Inc. (NYSE:MATX)’s China service was the primary driver of the increase in consolidated operating income YoY. It saw traditional peak season with strong freight demand resulting in significantly higher YoY freight rates for both the CLX and MAX services.
Analysts have noted a recent trend of customers transitioning from air freight to Matson, Inc. (NYSE:MATX)’s expedited ocean services, such as CLX and MAX. These are among the fastest and most reliable in the Transpacific trade. They opine that this shift should offer a better value proposition, contributing to increased volumes and revenue.
Furthermore, Matson, Inc. (NYSE:MATX) announced significant investments in its fleet, including the construction of 3 new Aloha Class vessels. These investments are part of its strategy to enhance shipping capacity and strengthen its position in the competitive container shipping industry. The new Aloha Class vessels should bolster the company’s ability to compete in the high-demand Transpacific and Hawaii shipping markets, resulting in sustainable revenue growth.
The London Company, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Matson, Inc. (NYSE:MATX) – MATX ocean freight services are benefiting from rising shipping rates and improving market conditions. Global ocean freight pricing has been driven up by the ongoing disruption in the Red Sea, coupled with ramping peak season demand and healthier trade volumes. MATX’s success since the onset of the pandemic has led to permanent volume additions in the China trade lane, a transformed balance sheet. and significant share count reduction. MATX remains strategically positioned as a US Jones Act shipping operator and its expedited freight service continues to offer an attractive value proposition for its customers.”
Overall MATX ranks 8th on our list of the best TaaS stocks to invest in according to hedge funds. While we acknowledge the potential of MATX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MATX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.