Transport Sector Hidden Gems: Stocks With Up to 80% Upside Potential, Says Safra (2025 Update)
- Why Transportation Stocks Are Flying Under the Radar
- The Top Contenders: From Rental Fleets to Rail Networks
- Vamos: The Undisputed Upside Leader
- JSL: A 70% Opportunity in Logistics
- Sector Rotation: New Leaders Emerge
- The Rental Resilience Story
- FAQs: Navigating Brazil's Transport Sector
While flashy sectors like iron ore, oil, and banking dominate headlines, Brazil's transportation and logistics industry is quietly harboring some of the market's most undervalued opportunities according to Safra analysts. Their latest DEEP dive reveals surprising upside potential ranging from 16% to a staggering 80% across select companies, even amid challenging macroeconomic conditions. Let's unpack these findings and explore why savvy investors might want to buckle up for this overlooked sector.
Why Transportation Stocks Are Flying Under the Radar
In their September 2025 sector update, Safra analysts Luiz Peçanha and Arthur Godoy adopted a "selectively optimistic" stance, maintaining long-term confidence while exercising caution on certain names. The team revised price targets across the board following recent earnings reports and macroeconomic reassessments. "What makes this update particularly interesting is our shifted perspective - we're now seeing more nuanced opportunities rather than blanket optimism," the analysts noted in their report.
The sector faces headwinds from Brazil's 15% benchmark interest rate (Selic), which continues pressuring highly Leveraged companies. Yet several players demonstrate remarkable resilience through operational excellence and strategic positioning. TradingView data shows the B3 Transport Index has underperformed the broader market by 12% year-to-date, creating what Safra believes are compelling entry points.
The Top Contenders: From Rental Fleets to Rail Networks
Safra's refreshed recommendations spotlight companies across transportation subsectors, with particular emphasis on rental services and logistics providers. Here's the breakdown of their top picks:
| Company | Ticker | Rating | Price Target | Upside Potential |
|---|---|---|---|---|
| Localiza | RENT3 | Buy | R$53.20 | 42% |
| Vamos | VAMO3 | Buy | R$7.30 | 79% |
| JSL | JSLG3 | Buy | R$10.80 | 70% |
| Rumo | RAIL3 | Buy | R$21.80 | 49% |
| Motiva | MOTV3 | Buy | R$18.80 | 27% |
Vamos: The Undisputed Upside Leader
With a jaw-dropping 79% potential upside to its R$7.30 price target, Vamos stands as Safra's most bullish call. The equipment rental specialist currently trades at a 55% discount to its five-year average valuation - what analysts describe as "an excessively punitive multiple."
However, the report notes some sobering revisions:
- Rental revenue projections cut by 3% due to higher asset repossessions in Q2 2025
- 2025 EBITDA estimate reduced 4.5%
- 2025 net income forecast slashed 22.6% to R$354 million
The silver lining? Safra increased their yield marginal monthly projection to 2.7% (from 2.6%), partially offsetting these adjustments. "While short-term pressures exist, Vamos' discounted valuation more than compensates for execution risks," the analysts concluded.
JSL: A 70% Opportunity in Logistics
Logistics powerhouse JSL claims the second-highest upside potential at 70%, with Safra setting a R$10.80 target. Trading at just 4.5x 2026 P/E (a 41% discount to its historical average), the company faced headwinds in light vehicle resales - particularly pickup trucks - prompting higher depreciation rate assumptions.
Yet brighter days may be ahead: contract renegotiations have boosted margins faster than expected, with depreciation rates projected to normalize to 10% annually by 2027. "JSL's ability to quickly adapt commercial terms demonstrates management's operational agility," the report highlighted.
Sector Rotation: New Leaders Emerge
In a notable shift, Safra elevated Localiza and JSL to top sector picks, dethroning former favorite Rumo. "These companies stand out for operational execution, near-term earnings visibility, and strategic positioning in structurally growing segments," analysts explained.
Infrastructure play Motiva maintains its buy rating with an increased R$18.80 target, supported by margin expansion and multiple catalysts. Meanwhile, Ecorodovias saw its recommendation downgraded to Neutral despite a higher price target (R$9.50), following its 100% year-to-date rally.
Rail operator Rumo faced the most dramatic target cut - from R$31.70 to R$21.80 - reflecting weaker freight dynamics and elevated capex. "The market's punishing any perceived uncertainty in this rate environment," commented a BTCC market strategist familiar with the report.
The Rental Resilience Story
Localiza continues impressing analysts with robust performance, maintaining its buy rating despite a modest target adjustment to R$53.20. The rental leader benefits from effective tariff pass-through and fleet renewal strategies. In contrast, peer Movida remains Neutral-rated (R$8.40 target) as high leverage limits near-term upside.
Source: DepositPhotos
FAQs: Navigating Brazil's Transport Sector
Why is Safra bullish on transport stocks despite economic challenges?
Safra sees select companies benefiting from operational improvements and structural growth trends that outweigh macroeconomic pressures. The sector's underperformance has created valuation opportunities.
Which transport subsector appears most attractive?
Equipment rental and logistics services currently offer the best risk-reward balance according to Safra, with companies like Vamos and JSL showing both upside potential and operational resilience.
How does high interest rates impact these recommendations?
The 15% Selic rate particularly pressures highly leveraged firms. Safra's analysis focuses on companies with manageable debt loads and strong cash generation capabilities.
