Everything's down this year, right? Wrong! The Dow Jones Transportation Index is up more than 2 percent -- double digits in the last several months. Thomas Wadewitz of JPMorgan has some insights.
"Transports had really been weak in 2007," he told CNBC. "There's a sense that as early cyclicals, they should benefit when the Fed's aggressively easing rates, and the stocks should really do well ahead of improvement in their underlying demand."
So how to play transportation stocks?
"Our approach has really been to focus on what we'll characterize as quality names, names that have a good company-specific story," Wadewitz said. "An example of that is J. B. Hunt , which is viewed as a truckload carrier, but it has a strong intermodal business, where they facilitate container movements on the railroads."
He also likes Con-Way, a less-than-truckload carrier whose tonnage has improved, despite overall declines in its market.
"Landstar is a non-asset name where they use owner-operators instead of owning the trucks," he added.
On the railroad side, the international market for American coal has heated up dramatically.
China has turned from an exporter of coal to an importer, but Wadewitz says the real market for coal can be found in the eastern U. S.
"It's really eastern coal that's a stronger play for export," he explains. "The eastern coal is higher BTU, higher quality, so the incremental demand is more for eastern coal. Norfolk Southern and CSX would be a way to play that."
Wadewitz's firm owns CSX and J. B. Hunt; CSX, Con-Way, Norfolk Southern and Landstar are among the firm's investment banking clients.