Truckin’ along: Transport stocks should be bought on the dip, market watcher says

Transportation stocks are seeing a volatile start to 2018, but some say any weakness should be bought.

The Dow Jones transportation average is now just barely negative on the year, but as recently as Friday it was down 14 percent from its 2018 highs hit in January. The 20-constituent index, composed of airline and transport stocks like Delta Air Lines, J.B. Hunt and Norfolk Southern, rolled over with the broader market earlier this month before making a comeback in recent sessions.

The group has room to run in the long-term, according to Michael Bapis, partner and managing director at the Bapis Group at HighTower Advisors. Here are his reasons why.

• The Dow transports index is still up 11 percent year over year, and in 2017 gained over 17 percent.

• Decades ago, it appeared transportation and technology stocks could not be more different, but a correlation between the groups is growing as e-commerce expands at a rapid clip.

• As the connection between companies like Amazon and shipping firms intensifies, transport stocks should be favored for the long haul.

• Dips should be bought for the next year to 18 months.

Bottom line: Though the transportation index has seen a bout of volatility with the rest of the market, some see long-term strength for the group and would buy on weakness.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more