Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

Investing in transportation stocks

The transportation industry tends to perform well in strong economies, but other volatile sectors can force it to make sharp turns.


Invest with Wealthsimple Trade

Wealthsimple Trade logo
  • Earn 2 free stocks
  • Free stock trades
  • No account fee
Go to site

Investing in the transportation industry is a great way to diversify your portfolio across several industries including airlines, railroads and trucking. But because it’s tied to several external industries including oil and gas, transportation stocks can be very volatile.

Government regulations can also deliver a major impact. So can world events like the coronavirus, which rattled the transportation industry in 2020.

What are transportation stocks?

Transportation stocks are part of various companies that move people, products and goods all over the world by land, sea or air. They make up a diverse industry containing several different types of companies including:

  • Airlines
  • Air freight companies
  • Trucking firms
  • Railroads
  • Marine shipping companies
  • Logistics companies
  • Service providers that help transportation firms such as airport operators and marine ports

The transportation industry is a big part of everyday life. Transportation companies get you to where you need to go, food to your supermarket and clothes to your local stores.

Why invest in transportation stocks?

In a global economy, people need to move goods, services and talent around. This is where the transportation industry comes in. And because a vast number of companies are involved, transportation stocks can be seen as clear avenues to portfolio diversification.

The transportation industry is part of the wider industrial sector. That’s why its performance is strongly tied to the state of the overall economy. These companies tend to perform well under robust economic conditions.

This performance can be an indicator that businesses are gaining speed and moving goods and services around to meet demand. But the transportation industry can be highly speculative and hard to predict.

Risks of investing in transportation stocks

Because the transportation industry is so vast, transportation stocks can be affected by the performance of several other sectors. For instance, transportation companies rely heavily on fuel to get the job done. That includes everything from diesel to jet fuel.

If fuel prices rise, so can the costs for different transportation companies. That in turn can cut profits as well as stock prices. An active investor may not benefit from transportation stocks in a difficult economy.

Moreover, trade disputes between countries can severely affect the movement of goods and people from one place to another – along with the companies responsible for making this movement happen. Government regulations can have the same effect.

Government regulations fueled by COVID-19 changed the transportation industry in 2020. Cities around the globe limited transportation services, placed travel restrictions and implemented social distancing mandates. This severely affected the movement of people, and companies like airlines suffered.

A study published on Statista says, “For the week starting November 9, 2020, the number of scheduled flights worldwide was down by 46.5 percent compared to the week of November 11, 2019.”

With uncertainty surrounding the state of COVID-19 restrictions as well as medical advances, the pandemic’s future impact on the transportation industry remains uncertain. A report by Deloitte even went as far as to say, “Commuting and traveling patterns may not recover to their pre–COVID-19 state once lockdowns are lifted.”

Transportation stocks

With an industry as widespread as transportation, there are many stocks to choose from. Here is a brief list of your investment options.

What ETFs track the transportation category?

You don’t need to limit your investments in transportation to stocks. You can also buy shares of exchange-traded funds, or ETFs, which invest in diversified baskets of transportation of stocks. Here are some examples:

  • S&P Transportation ETF (NYSEArca: XTN)
  • iShares Transportation Average ETF (BATS: IYT)
  • First Trust Nasdaq Transportation ETF (NasdaqGM: FTXR)
  • Direxion Daily Transportation Bull 3X Shares (NYSEArca: TPOR)
  • SPDR S&P Kensho Smart Mobility ETF (NYSEArca: HAIL)
  • U.S. Global Jets ETF (NYSEArca: JETS)

A beginner’s guide to exchange traded funds

Compare trading platforms

Whether you’re investing in transportation stocks or ETFs, you’ll need a brokerage account. Because key differences such as fees can affect your returns, you should carefully review your options.

Name Product Available Asset Types Stock Fee Option Fee Account Fee ETF Transaction Cost Feature Table description
Wealthsimple Trade
Stocks, ETFs
Get 2 free stocks when you open a Wealthsimple Trade personal account and deposit and trade at least $150.
Pay no commissions when you trade Canadian stocks and ETFs with Wealthsimple Trade.
Interactive Brokers
Stocks, Bonds, Options, ETFs, Currencies, Futures
Min. $1.00, Max. 0.5% of trade value
$1.50 min. per order
Min. $1.00, Max. 0.5% of trade value
Extensive trading capabilities and global investment tracking.
Access market data 24 hours a day, six days a week and invest in global stocks, options, futures, currencies, bonds and funds from one single account.
BMO InvestorLine
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
$9.95 + $1.25 per options contract
$0 if conditions met, otherwise $25/quarter
$0 - $9.95
Buy and sell a select group of Canada’s most popular ETFs without paying commissions.
An easy-to-use online trading platform with access to research, tools, and the option to access InvestorLine adviceDirect for additional professional support.
Scotia iTRADE
Bonds, Options, Mutual Funds, ETFs, GICs, International Equities
$9.99 + $1.25 contract ($4.99 + $1.25 contract if completed 150 trades or more a quarter)
$9.99 ($4.99 if completed 150 trades or more a quarter)
Pay no annual account fees.
Buy, sell and trade ETFs, Equities, Options and more with competitive commissions.
CIBC Investor's Edge
Stocks, Bonds, Options, Mutual Funds, ETFs
$4.95 - $6.95
$4.95 - $6.95 (+$1.25 per contract)
$0 if conditions met, otherwise $100/year
$4.95 - $6.95 is applicable for online stock, ETF and option trades only. Pay $4.95 when you qualify as an Active Trader (trade 150+ times per quarter).
An intuitive and easy-to-use platform with access to a variety of tools that help you make smart decisions and trade with confidence.
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals
$9.95 + $1 per contract
Get $50 in free trades when you fund your account with a minimum of $1,000.
Opt for self-directed investing and save on fees or get a pre-built portfolio and take some of the guesswork out.
Qtrade Direct Investing
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
$6.95 - $8.75
$6.95 - $8.75 + $1.25 per contract
$0 if conditions met, otherwise $25/quarter
$0 - $8.75
Get up to 50 free trades. Be one of the first 100 new Qtrade clients to use the promo code 50FREETRADES and deposit a minimum of $10,000 (or top up to $15,000 to get $150 transfer fees waived). Valid until December 31, 2021.
Qtrade Direct Investing offers low trading commissions and an easy-to-use platform with access to powerful tools and a wide selection of investment options. Trade 100 ETFs free of charge and thousands more for $8.75 or lower.

Compare up to 4 providers

Bottom line

Investing in transportation stocks can be a lucrative way to diversify your portfolio. But strains in the overall economy can derail the transportation industry.

Do your due diligence as an investor when considering transportation stocks, especially in the midst of COVID-19. Also compare your brokerage options before you begin trading stocks.

Frequently asked questions

Are pipeline stocks part of transportation stocks?
Technically, no. Even though pipelines transport resources like natural gas and crude oil, pipeline stocks are energy stocks.

Are there transportation stock mutual funds?
Yes. Examples include the Fidelity Select Transportation Portfolio (Nasdaq: FSRFX) and the Rydex Transportation Fund (Nasdaq: RYTSX).

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

More on investing

Best cheap stocks to buy now

Best cheap stocks to buy now

Stock trading doesn’t have to be expensive. Using Finder’s proprietary algorithm, we’ve identified the best cheap Canadian and US stocks to buy now.

Read more…
How to buy Cue Health Inc. stock in Canada | $9.93

How to buy Cue Health Inc. stock in Canada | $9.93

Steps to owning and managing Cue Health stocks, with 24-hour and historical pricing before you buy.

Read more…
How to buy Argo Blockchain stock in Canada | $17.02

How to buy Argo Blockchain stock in Canada | $17.02

Steps to owning and managing ARBK stock, with 24-hour and historical pricing before you buy.

Read more…
How to buy Planet Labs (PL) stock in Canada when it goes public

How to buy Planet Labs (PL) stock in Canada when it goes public

Everything we know about the N/A IPO, plus information on how to buy in. Read more…
Top Canadian stock discussion forums in 2021

Top Canadian stock discussion forums in 2021

We look at 6 popular stock discussion groups from Canada and overseas.

Read more…
Best dividend stocks in Canada

Best dividend stocks in Canada

We’ve rounded up the top dividend stocks in Canada. Check out current stock prices, historical stock performance, company info and more.

Read more…

More guides on Finder

Ask an Expert

You must be logged in to post a comment.

Go to site