A Look Inside the Transports

May 1, 2008: 11:06 AM CST

As I mentioned previously, the DJ Transportation Average is outperforming the Dow Jones Industrial Average, which generally is bullish for the overall market.

Let’s peek inside the average to see which components of the Transports are doing the best.

Let’s break it down into the Air Freight and Railroads, and their percentage performance since the start of 2008.

First, the Air Freight:

CH Robinson (CHRW) has outperformed the other major air freights including FedEx (FEDX), UPS Inc (UPS), UTi Worldwide (UTIW), and Expeditors Int’l (EXPD).

The Air Freights spent the middle of the graph flat before rising later into April with the current market rise.

Next, the Railroads:

The true strength from the Transportation Average comes from the Railroads (remember Warren Buffett buying up some railroad stocks not too long ago – he was precient as usual).

With gas/oil costs rising, some companies have shifted to the lower costs afforded by the railroads to get their goods where they need to be.  As such, railroad stocks in general have benefitted from higher transportation costs (via gasoline).

The two top performers, Genesse & Wyoming (GWR – up 50%) and CSX (CSX – up over 45%) have outperformed most other stocks in the broader indexes this year.  Chances are you probably haven’t heard of these names yet, but as they continue to rise, you may hear more about them.

Let’s look at the top performer – Genesee & Wyoming (GWR):

The lowest price of the year was around January 6th, 2008 and the highest price was just last week, indicating a very strong and pervasive uptrend in the stock.

Keep an eye on these stocks and these sectors, and what they might mean for the overall economy.

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