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How Wall Street Analysts View US Transportation Stocks in 2017

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Direction of major indexes

In the final part of this series, we’ll see what Wall Street analysts have to say about major US transportation stocks. The Dow Jones Transportation Average (or DJT), a broader market parameter, has been highly volatile throughout 2017. However, the DJT was up 5.2%, and the Dow Jones Industrial Average (or DJI) has returned 8.6% since January 1, 2017.

During the same period, the SPDR S&P 500 ETF Trust (SPY) returned 8.9%. In the chart below, we’ll take a look at analysts’ recommendations for the major truckload and LTL (less than truckload) carriers.

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Analysts’ recommendations

In the chart above, you can see that the majority of analysts have “hold” recommendations for full truckload carriers J.B. Hunt Transport Services (JBHT), Werner Enterprises (WERN), and Landstar System (LSTR)

The only exception was XPO Logistics (XPO), which has a majority “buy” opinion. XPO has also a presence in Europe. Plus, the company has adapted an inorganic approach to growth, having acquired three companies in 2016.

In the LTL space, analysts’ opinions seem to be divided. Old Dominion Freight Line (ODFL), YRC Worldwide (YRCW), and SAIA (SAIA) have roughly 50% “hold” recommendations. The only LTL in the chart above with a “buy” mandate is FedEx (FDX).

Transportation stocks: Driving factors

Looking at analysts’ ratings for the major US transportation stocks (IYT), it appears that analysts are waiting for concrete action from the US government that could boost sentiment in these stocks. The Trump administration’s infrastructure budget and spending plans are key to unlocking returns in transportation stocks.

President Trump announced a plan to modernize the US air traffic control system. His $1.0 trillion infrastructure spending plan aims to upgrade US infrastructure, including waterways, highways, and airports. Trump’s visit to the Department of Transportation in June 2017 was a significant move in that direction. He reportedly discussed regulatory changes with respect to rail and highway infrastructure.

Further action on the infrastructure spending front could provide a boost for transportation stocks going forward.

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