Market Overview

Should Transport Stocks Be In Your Portfolio?

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According to a recent industry update from Deutsche Bank Markets Research, investors may want to consider adding transport stocks to their portfolios, if they are not already included.

The report, penned by analysts Robert Salmon and Seldon Clarke, listed three Buy-rated top picks and an additional six Buy names and eight Hold-rated issues.

The Sector

Deutsche Bank concluded, "Over the past two weeks, several of the more defensive transportation names have been able to record gains despite pullbacks in the broader-market. Between the end of the last recession and year-end 2014, the transports exhibited a nearly +1.00 correlation with the S&P 500 […] However, since early 2015, our coverage universe has meaningfully underperformed the broader market as demand weakened […] However, since then, our coverage universe has started to show better relative performance than the broader market […] We believe investors should maintain some exposure in our coverage universe."

Related Link: The Coal Conundrum For Transportation ETFs

Top Picks

Werner Enterprises, Inc. (NASDAQ: WERN) tops the analysts list, amid meaningful outperformance.

Commenting specifically upon Werner, Deutsche Bank noted, "While transportation demand trends were broadly disappointing in Q4 2015, the group generally rallied on earnings as performance was a lot less bad than feared. We believe investors should maintain some exposure in our coverage universe and our top pick remains Buy-rated WERN ($26.22)."

Second on the firm's top picks list is FedEx Corporation (NYSE: FDX). The analysts highlighted FedEx's recent acquisition talks of TNT, citing, "Last week, TNT Express announced that it has agreed to sell its airline operations, TNT Airways and Pain Air Lineas Aereas, to ASL Aviation. The agreement is contingent upon a successful acquisition of TNT by FDX, which is expected to occur in the first half of this year. The sale of TNT's airline is a requirement to obtain final approval of the acquisition. In conjunction with the transaction, ASL Aviation Group also entered a multi-year agreement to operate flights for the FedEx/TNT combination."

Capping off the top picks list is Swift Transportation Co (NYSE: SWFT).

Other Buys

Deutsche Bank also included the following Buy-rated names in the industry update:

  • Genesee & Wyoming Inc (NYSE: GWR)
  • Roadrunner Transportation Systems Inc. (NYSE: RRTS)
  • Union Pacific Corporation (NYSE: UNP)
  • XPO Logistics Inc (NYSE: XPO)
  • YRC Worldwide Inc (NASDAQ: YRCW)
  • Fortress Transprtn and Infr Investrs LLC (NYSE: FTAI)

Hold-Rated Names

The following transportation issues are currently rated at Hold by Deutsche Bank:

  • Heartland Express, Inc. (NASDAQ: HTLD)
  • J B Hunt Transport Services Inc (NASDAQ: JBHT)
  • Knight Transportation (NYSE: KNX)
  • Landstar System, Inc. (NASDAQ: LSTR)
  • Norfolk Southern Corp. (NYSE: NSC)
  • Old Dominion Freight Line (NASDAQ: ODFL)
  • United Parcel Service, Inc. (NYSE: UPS)
  • CSX Corporation (NASDAQ: CSX)

Latest Ratings for WERN

Oct 2018Loop CapitalInitiates Coverage OnBuy
Jul 2018Credit SuisseMaintainsNeutralNeutral
Jul 2018BuckinghamMaintainsBuyBuy

View More Analyst Ratings for WERN
View the Latest Analyst Ratings

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