MarketsJun 20, 2026
Investors Are Finding Opportunities in the Transport Sector
Market Rotation
Rhea Lobo
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Transport stocks have been one of the quieter winners of 2026, climbing steadily even as other sectors grabbed headlines. A ceasefire between the US and Iran sent oil prices lower, and the sector roared back from a brief oil-driven blip. The Dow Jones Transportation Average is up 28% this year, and analysts argue the group still isn't expensive.
Despite the run, the iShares Transportation Average ETF trades at 22 times this year's earnings estimates. That's a discount to its five-year average forward price-to-earnings ratio of 24. The ETF has historically traded at nearly a 10% premium to the S&P 500.
Fundstrat called transportation a “cleaner cyclical setups” in the market. Further progress on an Iran ceasefire, paired with lower oil prices, could add another tailwind, as cheaper crude cuts fuel costs for airlines, trucking firms, and shippers and flows straight to profits.
FedEx trades at 17 times earnings forecasts and recently completed the spinoff of its freight division. Analysts at BofA Securities expect FedEx to benefit from lower overhead now that the freight unit is separate. UBS flagged margin improvement as a key lever for both FedEx and the newly independent FedEx Freight.
Earnings per share for FedEx are forecast to grow more than 20% in the current quarter.
UPS trades at an even steeper discount, at 15 times earnings estimates. United Airlines and Delta Air Lines, which both recently hit record highs, still trade at below-market multiples. So do Southwest Airlines, Ryder, and Union Pacific.
Uber Technologies, which was added to the Dow Jones Transportation Average in early 2024, trades at 22.2 times this year's earnings estimates.
Railroads are getting specific attention from investors tracking the bull market rotation. Union Pacific posted record first-quarter revenue of $6.2B, up 3% year over year, with net income of $1.7B. Management has guided for low double-digit earnings per share growth through 2027.
Union Pacific is also pursuing an acquisition of Norfolk Southern that would create a 50,000-mile transcontinental rail network, pending regulatory approval.
J.B. Hunt Transport Services has been an even bigger mover, up 107% over the past year. The company converts freight between highway trucks and railroads, a model called intermodal shipping. Intermodal volumes hit record levels, with March up 7% year over year.
JBHT also beat its own cost-reduction target, hitting a $130M annualized run rate versus a $100M goal.
The rally isn't confined to a handful of names. CSX is up 29.4% year to date, outpacing the broader transportation sector's average gain of 15.2%. Analyst earnings estimates for CSX have moved 2.9% higher over the past three months, a signal of improving sentiment.
The broader Transportation-Rail industry is up 18.2% this year.
Shipping stocks have moved even faster. The Transportation-Shipping industry is up 40.7% year to date. EuroDry has gained 97.9% this year, with consensus earnings estimates rising 29.9% over the past three months.
The Strait of Hormuz interim ceasefire drove a drop in Brent crude and a broad relief rally across transportation and shipping stocks. Smoother shipping routes and less fuel-cost pressure are the direct benefits analysts have pointed to.
One headwind that remains: Amazon recently expanded its freight offering to all US destinations including third-party warehouses, adding competitive pressure on trucking companies.
Dow Theory, a long-standing framework in technical analysis, holds that transport stocks moving in tandem with the broader Dow Jones Industrial Average is a positive signal for the overall market. The Dow 30 recently hit a record high and is up more than 8% this year, suggesting the transports are confirming that move.
