Oil prices have just dropped over 9% as tensions between the US and Iran eased, and Brent crude is now below $88 a barrel after recently sitting above $100. For industrial and transportation stocks, that kind of move in fuel costs can quickly reshape profit pressures, pricing power and risk. This article looks at how that reset in energy markets might affect companies in our Industrials and Transportation Stocks screener, which focuses on healthier, larger players across key English speaking markets. Ahead, find 3 stocks that appear positively exposed to this news driven shift in fuel and energy costs.

NFI Group (TSX:NFI)

Overview: NFI Group is a Winnipeg based manufacturer of transit buses and motor coaches, supplying heavy duty, double decker and medium duty vehicles, as well as parts and services, to public transport authorities and operators across North America, the UK, Europe and the Asia Pacific.

Operations: NFI Group generates about $3.0b in revenue primarily from Manufacturing Operations at $3.0b, with Aftermarket Operations contributing $626.8m, largely tied to customers in North America at $3.1b, followed by the UK and Europe at $454.4m and Asia Pacific at $39.7m.

Market Cap: CA$3.1b

NFI Group stands out in the Industrials and Transportation Stocks screener because it combines exposure to public transit demand, a record multiyear order backlog and an expanding electric bus offering with a valuation that screens as inexpensive on several metrics, including price to sales and discounted cash flow estimates. The recent sharp drop in oil prices could ease operating cost pressure for transit operators, which may support fleet renewal decisions that feed NFI Group’s order book, while its growing aftermarket parts and services business offers recurring revenue. At the same time, investors need to weigh high leverage, tariff and funding risks, and pressure in certain markets such as the UK, which makes the ongoing turnaround story one to monitor closely.

NFI Group’s turnaround, order backlog and fuel sensitive customers make valuation the real plot twist here. The DCF valuation analysis for NFI Group could reveal how much of that story the market is actually pricing in.

York Space Systems (YSS)

Overview: York Space Systems is a Greenwood Village based space and defense company that designs, builds and operates satellites and provides end to end mission services and software for US government and commercial customers.

Operations: York Space Systems generates about $396.3m in revenue from Aerospace & Defense, all from customers in the United States.

Market Cap: $2.2b

York Space Systems gives you direct exposure to the build out of US defense and communications satellites at a time when oil driven inflation pressures are easing, which can help support government spending power. The company is scaling quickly, with revenue of about $396.3m from US Aerospace & Defense work, index inclusion raising its profile and recent missions proving it can deploy and operate constellations at scale. However, it is still loss making and relies heavily on external borrowing. That combination of high growth forecasts, premium P/S valuation and concentrated US defense exposure means investors need to weigh execution and funding risk carefully, especially as management pursues further acquisitions and capacity expansion.

York Space Systems is scaling quickly, yet investors may be missing how its growth, funding needs and defense exposure fit together. See how the analyst forecasts for York Space Systems reframes the risk and where the real tension sits.

Magellan Aerospace (TSX:MAL)

Overview: Magellan Aerospace is a Mississauga based manufacturer that supplies aeroengine and aerostructure components, landing gear systems, castings and space hardware to aircraft and helicopter makers, defense programs, governments and space customers across Canada, the United States and Europe.

Operations: Magellan Aerospace generates about CA$1.1b in revenue from Aerospace products and services, with sales spread across Canada at CA$411.6m, Europe at CA$356.7m and the United States at CA$300.6m.

Market Cap: CA$2.0b

Magellan Aerospace gives you exposure to commercial and defense aviation, plus space and munitions contracts, at a time when lower oil prices could help airlines and industrial customers manage fuel sensitive cost pressures. Earnings have grown strongly in recent years, and recent government contracts and dividends point to an established position in key defense supply chains. At the same time, a relatively high P/E ratio, modest 4.2% net margin and reliance on external borrowing mean expectations are already demanding and balance sheet risk matters. If you are weighing how that trade off between growth, quality and funding risk stacks up, the story around Magellan Aerospace is more nuanced than the headline numbers suggest.

Magellan Aerospace appears to be a story where established defense contracts and dividends meet a balance sheet that still raises questions. Before you decide how that trade off stacks up, review the Magellan Aerospace financial health report

The three Industrials and Transportation stocks here are just a starting point, with the full screener surfacing 36 more companies in the Industrials and Transportation Stocks screener that each carry their own fuel price sensitivities, balance sheet profiles and business stories. Use Simply Wall St to explore specific catalysts, risk flags and narratives that matter to you so you can focus on the ideas in this sector that best fit your approach.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.