Morgan Keegan has upgraded shares of Hub Group, Inc. (NASDAQ: HUBG), an intermodal marketing company, to Outperform from Market Perform, saying that the company's share price below $35 presents an attractive opportunity for investors in the current environment.

Intermodal traffic is already up 9.1 percent in 2011 through February 19 on the heels of a 7.4 percent increase in 2010 after a dismal 14.1 percent decline in 2009, the brokerage said.

In addition to strong intermodal trends in the industry and share gains by the company, we expect that high oil prices will likely prompt shippers to shift more shipments to rail from trucking to take advantage of the less costly mode of transportation in a rising fuel environment, analyst Art Hatfield wrote in a note to clients.

The analyst said the company's intermodal division is gaining market share; the brokerage division focusing more on profitable accounts; and the logistics division increasing its business. As such, Hatfield expects revenue growth of 12.4 percent in 2011 and 11.7 percent in 2012.

In addition to strong earnings growth of 35.3 percent in 2011 and 29.3 percent in 2012, the analyst see opportunities for further returns to shareholders as the company completes its share repurchase program and puts available liquidity to use on accretive acquisitions.

The company repurchased 36,100 shares in the fourth quarter for $1.2 million and still has $6.4 million left on the program which expires in March 2011. Furthermore, the company has $115.1 million in cash and no debt on its balance sheet.

So we believe there is ample financial capacity to make accretive acquisitions if the right opportunity arises, the analyst said.

Meanwhile, the company's shares have fallen 2.0 percent so far in 2011 compared to 1.8 percent decline for the Dow Jones Transportation Index and 3.6 percent increase for the S&P 500.

We believe shares of HUBG present an attractive risk-reward proposition at current valuation levels, Hatfield said.

Hatfield has a price target of $42 on Hub Group stock.

Shares of Hub Group closed Thursday's regular trading session at $34.27 on Nasdaq. In the extended trading, they gained 22 cents to trade at $34.49.