Investing in transportation stocks

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:

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.”

But remember, the transportation industry is a large one with several major players. This is why it’s important to carefully analyze transportation companies as well as their plans for future growth, with a keen eye toward how they expect to take on all challenges including the COVID-19 pandemic.

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. Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

• Kirby Corporation (KEX.US)

  Company summary

  Kirby Corporation operates domestic tank barges in the United States. Its Marine Transportation segment provides marine transportation services and towing vessels transporting bulk liquid products, as well as operates tank barges throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along three United States coasts, and in Alaska and Hawaii. It also transports petrochemicals, black oil, refined petroleum products, and agricultural chemicals by tank barges; and operates offshore dry-bulk barge and tugboat units that are engaged in the offshore transportation of dry-bulk cargoes in the United States coastal trade. As of December 31, 2020, this segment owned and operated 1,066 inland tank barges with 24.1 million barrels of capacity, 248 inland towboats, 44 coastal tank barges with 4.2 million barrels of capacity, 44 coastal tugboats, 4 offshore dry-bulk cargo barges, 4 offshore tugboats, and 1 docking tugboat. The company's Distribution and Services segment sells replacement parts; provides service mechanics to overhaul and repair engines, transmissions, reduction gears, and related oilfield services equipment; rebuilds component parts or diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications; rents generators, industrial compressors, railcar movers, and high capacity lift trucks; and manufactures and remanufactures oilfield service equipment, including pressure pumping units. It serves oilfield service, on-highway transportation, marine transportation, commercial fishing, construction, and power generation companies, as well as oil and gas operators and producers, and the United States government. The company was formerly known as Kirby Exploration Company, Inc. and changed its name to Kirby Corporation in 1990. Kirby Corporation was founded in 1921 and is headquartered in Houston, Texas.

  Historical performance

  Stock information

  • Market capitalization: $3415393280
  • P/E ratio: 60.6403
  • PEG ratio: 2.6273
  • Dividend yield: 0%

  Get more detailed information and learn how to buy KEX.US stock

• Globus Maritime (GLBS.US)

  Company summary

  Globus Maritime Limited, an integrated dry bulk shipping company, provides marine transportation services worldwide. It owns, operates, and manages a fleet of dry bulk vessels that transport iron ore, coal, grain, steel products, cement, alumina, and other dry bulk cargoes. As of June 15, 2021, the company owned and operated seven vessels with a total carrying capacity of 463,765 deadweight tonnage. It charters its vessels to operators, trading houses, shipping companies and producers, and government-owned entities. The company was incorporated in 2006 and is based in Athens, Greece. Globus Maritime Limited operates as a subsidiary of Firment Trading Limited.

  Historical performance

  Stock information

  • Market capitalization: $61928040
  • PEG ratio: 0
  • Dividend yield: 0%

  Get more detailed information and learn how to buy GLBS.US stock

• Alaska Air Group (ALK.US)

  Company summary

  Alaska Air Group, Inc., through its subsidiaries, provides passenger and cargo air transportation services. The company operates through three segments: Mainline, Regional, and Horizon. It flies to approximately 115 destinations throughout the United States and North America. The company was founded in 1932 and is based in Seattle, Washington.

  Historical performance

  Stock information

  • Market capitalization: $6742662144
  • P/E ratio: 517.4039
  • PEG ratio: 1.3
  • Dividend yield: 0%

  Get more detailed information and learn how to buy ALK.US stock

• CSX Corporation (CSX.US)

  Company summary

  CSX Corporation, together with its subsidiaries, provides rail-based freight transportation services. The company offers rail services; and transportation of intermodal containers and trailers, as well as other transportation services, such as rail-to-truck transfers and bulk commodity operations. It transports chemicals, agricultural and food products, automotive, minerals, forest products, fertilizers, and metals and equipment; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, and industrial plants, as well as exports coal to deep-water port facilities. The company also offers intermodal transportation services through a network of approximately 30 terminals transporting manufactured consumer goods in containers; and drayage services, including the pickup and delivery of intermodal shipments. It serves the automotive industry with distribution centers and storage locations, as well as connects non-rail served customers through transferring products from rail to trucks, which includes plastics and ethanol. The company operates approximately 19,500 route mile rail network, which serves various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec, as well as owns and leases approximately 3,539 locomotives. It also serves production and distribution facilities through track connections. CSX Corporation was incorporated in 1978 and is headquartered in Jacksonville, Florida.

  Historical performance

  Stock information

  • Market capitalization: $79854387200
  • P/E ratio: 22.2907
  • PEG ratio: 1.7336
  • Dividend yield: 0.0104%

  Get more detailed information and learn how to buy CSX.US stock

• Expeditors International of Washington (EXPD.US)

  Company summary

  Expeditors International of Washington, Inc. provides logistics services in the Americas, North Asia, South Asia, Europe, the Middle East, Africa, and India. The company offers airfreight services, such as air freight consolidation and forwarding; ocean freight and ocean services, including ocean freight consolidation, direct ocean forwarding, and order management; customs brokerage, intra-continental ground transportation and delivery, and warehousing and distribution services; and customs clearance, purchase order management, vendor consolidation, time-definite transportation services, temperature-controlled transit, cargo insurance, specialized cargo monitoring and tracking, and other supply chain solutions. It acts as a freight consolidator or as an agent for the airline, which carries the shipment. The company also provides ancillary services that include preparation of shipping and customs documentation, packing, crating, insurance services, negotiation of letters of credit, and the preparation of documentation to comply with local export laws. Its customers include retailing and wholesaling, electronics, technology, and industrial and manufacturing companies. Expeditors International of Washington, Inc. was incorporated in 1979 and is headquartered in Seattle, Washington.

  Historical performance

  Stock information

  • Market capitalization: $20901691392
  • P/E ratio: 21.2487
  • PEG ratio: 2.7716
  • Dividend yield: 0.0092%

  Get more detailed information and learn how to buy EXPD.US stock

• FedEx Corporation (FDX.US)

  Company summary

  FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. The company's FedEx Express segment offers express transportation, small-package ground delivery, and freight transportation services; time-critical transportation services; and cross-border e-commerce technology and e-commerce transportation solutions. Its FedEx Ground segment provides day-certain delivery services to businesses and residences. The company's FedEx Freight segment offers less-than-truckload freight transportation services. As of May 31, 2021, this segment had approximately 29,000 vehicles and 400 service centers. Its FedEx Services segment provides sales, marketing, information technology, communications, customer service, technical support, billing and collection, and back-office function services. The company's Corporate, Other and Eliminations segment offers integrated supply chain management solutions, specialty transportation, customs brokerage, and global ocean and air freight forwarding services; and an array of document and business services, and retail access to its customers for its package transportation businesses. The company was founded in 1971 and is based in Memphis, Tennessee.

  Historical performance

  Stock information

  • Market capitalization: $61891137536
  • P/E ratio: 12.3656
  • PEG ratio: 0.9838
  • Dividend yield: 0.012%

  Get more detailed information and learn how to buy FDX.US stock

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:

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.

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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 (FSRFX) and the Rydex Transportation Fund (RYTSX).