What happened

Shares of XPO Logistics (NYSE:XPO) gained 12.8% in April, according to data provided by S&P Global Market Intelligence, as the market cheered fresh evidence that shipping demand remains strong and XPO made progress toward a planned two-way split.

So what

XPO is a transportation conglomerate offering a range of services including trucking, freight brokerage, logistics, and fulfillment. The company's shares have more than doubled over the past year, riding the wave of increased business to consumer shipping demand as retail shifted online during the pandemic.

A conveyer at an XPO sorting facility.

Image source: XPO Logistics.

XPO is well-positioned to capitalize on that added demand. Its logistics operation specializes in providing a suite of warehousing and shipping services for retailers.

In April, United Parcel Service posted results that blew away expectations, providing evidence that even with the holiday season over and the pandemic beginning to recede, there is still strong demand for shipping services.

Wall Street is catching on. Barclays in April upgraded XPO to overweight from equal weight, and at least three other brokerages boosted their price targets on the shares.

XPO during the month also benefited from a positive write-up in Barron's, with the influential magazine arguing that the company is worth more than the sum of its parts. XPO is making progress toward its plan to separate its trucking and logistics operations into two publicly traded companies. The hope is that as stand-alones, both businesses will attract higher valuations than they do today inside a large corporation.

Now what

XPO released first-quarter earnings on May 3, and provided no evidence that the excitement is misplaced. Th company earned $1.46 per share on revenue of $4.77 billion, well above the $0.97 per share and $4.3 billion in sales consensus.

The company's quarterly revenue total was the highest in its history, and XPO said it expects full-year adjusted earnings growth of more than 31% in 2021.

There are still a lot of moving parts, as the company doesn't expect the split to be completed until the second half of this year. But for my money XPO, even after its gains, remains the best stock to buy among transportation companies.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.