Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Transportation Stocks Hold on to Gains

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Transportation stocks slightly outperformed the Dow Jones Industrial Average on Thursday, building on a week of relative gains, and suggesting closer convergence between the manufacturing and transportation sectors. A broad-based recovery should see strength in both sectors, so this trend supports the idea of continued economic growth.

FedEx (NYSE: FDX  ) wrapped up its investors conference on Thursday, adding more details to the sweeping cost-cutting plan it announced Wednesday. As customers switch to slower, more economical services, FedEx will be investing more in its low-cost ground operations. In particular, FedEx will phase out older trucks in favor of newer, more efficient models that will help keep fuel costs down. FedEx was virtually flat at $90 per share, but that's good news, considering that FedEx held on to the 4% advance it saw on Wednesday.

J.B. Hunt (Nasdaq: JBHT  ) , the nation's largest trucking company by market capitalization, announced third quarter earnings late Thursday afternoon, and shares were up as much as 4% in after-hours trading. Earnings per share came in at $0.65, compared to $0.57 in the third quarter of 2011. Analysts had expected $0.66, but J.B. Hunt attributed the slight underperformance to temporary costs incurred when the trucker signs up new clients. Operating revenue of $1.3 billion was not only 11% higher than 2011's $1.17 billion, but also slightly higher than analyst expectations of $1.27 billion.

J.B. Hunt's results suggest that North American demand may not be deteriorating as many investors expect. A stronger-than-expected holiday season could boost freight shipments, which would be a good signal that consumer confidence remains in recovery mode. The next major sign to look for will be earnings report of Class I railroad CSX (NYSE: CSX  ) , which derives 12% of revenue from intermodal traffic, which would be expected to grow if shoppers really are opening up their wallets for the holidays. CSX serves the eastern U.S., home to two-thirds of the American population, so its results on October 16th will be an important indicator, not only for the transportation sector, but for the broader economy.

Air travel was a dark cloud for the transportation sector, with September air traffic down from 2011 numbers. Airlines are hurting from low demand for business travel. Traffic fell 2.1% for the largest American domestic airline, United Continental Holdings (NYSE: UAL  ) . Shares were down 1.3% Thursday, making United Continental one of the worst performers in the Dow Jones Transportation Average. The nation's second-largest carrier, Delta Air Lines (NYSE: DAL  ) , also recorded a drop in traffic. Weakness in domestic travel pulled a good international performance down to a net contraction of 1.1% in September. Shares slipped 0.9%.

Airlines are also being squeezed by steadily rising fuel costs. The Department of Transportation announced Thursday that August fuel costs rose 3.6% from July, and some airlines are cutting flights, or upgrading their fleets, to keep up with rising energy prices. Delta even bought its own jet fuel refinery, anticipating an era of higher fuel costs in the future.

Fool contributor Daniel Ferry has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend FedEx. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2054436, ~/Articles/ArticleHandler.aspx, 5/24/2016 12:21:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Daniel Ferry

Daniel Ferry is a logistics nerd with a transportation planning background who focuses on transportation and advanced manufacturing companies. When he's not writing about trains, planes, and such, he enjoys learning and thinking about the business behind his favorite things: music, media, and good food and drink.

Today's Market

updated Moments ago Sponsored by:
DOW 17,706.02 213.09 1.22%
S&P 500 2,074.80 26.76 1.31%
NASD 4,848.23 82.45 1.73%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/24/2016 12:05 PM
CSX $25.69 Up +0.11 +0.44%
CSX CAPS Rating: *****
DAL $43.51 Up +0.56 +1.29%
Delta Air Lines, I… CAPS Rating: ***
FDX $164.65 Up +2.61 +1.61%
FedEx CAPS Rating: ****
JBHT $81.51 Up +0.49 +0.60%
J.B. Hunt Transpor… CAPS Rating: ****
UAL $44.81 Up +0.61 +1.38%
United Continental… CAPS Rating: **