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Barclays eyes strong transport sector; upgrades CN Rail, Norfolk Southern

  • Barclays upgrades its view of the transportation sector to positive, as an improving fundamental backdrop is set to drive meaningful earnings expansion across a broad array of transport companies.
  • Among signs of improving fundamentals: rail volume up 7%, U.S. trucking demand up 3%-4%, small package markets up 5%, and global trade up 5%-6% - all implying strong industrial demand.
  • Sector valuations are the highest since the 2009 recession and has outperformed YTD, but with Q2 results ripe to usher in more bullish sentiment in the space, Barclays expects valuations could have further to run as markets discount a more robust outlook.
  • The firm's top recommendations in sector are UNP, UPS, SWFT, CP and JBHT, while also upgrading CNI and NSC to Overweight, adding more exposure to the favorable North American rail vertical.
  • ETFs: IYT, XTN.
Comments (1)
  • Grant Dossetto
    , contributor
    Comments (139) | Send Message
     
    Where are we shipping things to? Exports fell off a cliff (and assuming baltic trade isn't lying it hasn't picked up in Q2). Consumer demand is non-existent. Hardly any pickup in retail sales or personal spending. Inventory build up isn't occurring supposedly...just a curious disconnect.
    30 Jun, 08:00 PM Reply Like
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