Individual Institutional
Sign in
Open account
Individuals Institutional

Call toll-free 800.328.1267

Login
[lwp_divi_breadcrumbs font_icon=”5||divi||400″ use_custom_home_link=”off” link_color=”#000000″ separator_color=”#000000″ current_text_color=”#FFFFFF” admin_label=”Breadcrumbs” module_class=”insight-breadcrumbs” _builder_version=”4.27.0″ _module_preset=”default” global_colors_info=”{}”][/lwp_divi_breadcrumbs]

Market Insights

Bringing you the trading news around the world.

Trains Good, Planes Bad: Transports and Traveling After Coronavirus

[showmodule id=”58959″]

As the economy staggers back from coronavirus, a split is appearing in the world of transportation. Railroads are thriving and air travel is struggling.

Consider these two points from yesterday:

  • The Association of American Railroads reported that train traffic increased by 9 percent last week. It was the biggest gain since March 2018.
  • The Transportation Security Administration (TSA) said air traveler screenings fell to the lowest level since July. Overall traffic is down about 70 percent in the last year.

Those reports closely match quarterly results from railroads and air-travel stocks. Union Pacific (UNP), Norfolk Southern (NSC), CSX (CSX) and Kansas City Southern (KSU) mostly beat estimates or issued strong guidance. Meanwhile, Delta Airlines (DAL) and United Airlines (UAL) issued bleak outlooks and Boeing (BA) missed consensus by a mile.

Norfolk Southern (NSC), daily chart.

The divergence between railroads and air travel isn’t much of a surprise. But investors may not realize how widely the implications go. Simply put, the world of travel is splitting into a new set of “winners” and “losers.”

Travelling in the Age of Coronavirus

These are the apparent “winners,” or beneficiaries of the new reality in transportation:

  • Railroads stand to gain from the economic rebound. In addition to the big operators like UNP, CSX, NSC and KSU, suppliers are also benefiting. Those include Trinity Industries (TRN), Greenbrier Cos. (GBX), Wabtec (WAB) and FreightCar America (RAIL).
  • Recreational vehicles have enjoyed stronger demand as Americans look to travel without flying. Those include Polaris (PII), Thor Industries (THO), Harley-Davidson (HOG) and Winnebago (WGO).

These companies may face risks from the new circumstances:

  • Traditional airlines like DAL, UAL, American Airlines (AAL), Southwest Airlines (LUV) and JetBlue (JBLU).
  • Aircraft makers and suppliers like BA, Spirit Aerosystems (SPR) and Textron (TXT).

In conclusion, some big differences are appearing in stocks related to transportation and travel as the U.S. tries to recover from the coronavirus pandemic. These may be longer-lasting trends for investors to know in coming months and years.

Thor Industries (THO), daily chart.

About the author

David Russell
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.

Related stories

View all
Stock Gains Widen as Investors Hope for Lower Inflation

Stock Gains Widen as Investors Hope for Lower Inflation

by | May 13, 2024

Money is flowing back into stocks as investors hope for a better inflation report this week. The S&P 500 rose 1.9 percent between Friday, May 3, and Friday, May 10. It was the third straight positive week. More than four-fifths of the index's members advanced,...

Chart of the Day: Oracle May Have Found Support

Chart of the Day: Oracle May Have Found Support

by | May 7, 2024

Oracle jumped to new highs almost two months ago. Now, after a pullback, the software giant may have found support. The first pattern on today’s chart is the gap higher on March 12 after earnings surprised to the upside. ORCL retraced the move and is starting to...

AI Boom Fades as Fundamentals Weaken: Earnings Recap

AI Boom Fades as Fundamentals Weaken: Earnings Recap

by | Apr 30, 2024

Most of the big earnings reports have now occurred, and so far they've done little to boost the market. Companies like Microsoft (MSFT), Meta Platforms (META), Netflix (NFLX), Caterpillar (CAT) and Intel (INTC) reported profits above Wall Street estimates. However...