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TheStreet Open House

Top Transport Picks From Fund Managers

NEW YORK ( TheStreet) -- Transportation stocks have rolled over the industrials over the past year, with the Dow Jones Transportation Average returning 25% compared with the DJIA's 12% gain. And some fund managers say that planes, trains and shippers will once again lead the way in 2011.

"We are focusing on the transports because of the high barriers of entry, sizable dividend yields and, in the case of the railroads, the increasing costs of fuel, which is putting the trucking business at a disadvantage when it comes to competing for low-cost shipping options in North America," says Dan Neiman, manager at the Neiman Large Cap Value Fund (NEIMX).

TheStreet searched for 2011's titanic transport stocks with Neiman and Eric Marshall, director of research for the Hodges Small Cap Fund (HDPSX).

Kirby Corp. (KEX)

Houston-based Kirby operates inland tank barges and towing vessels transporting petrochemicals, black-oil products, refined petroleum products and agricultural chemicals throughout the United States' inland waterway system. Kirby also owns and operates four ocean-going barge and tug units transporting dry-bulk commodities. As the largest inland barge operator in North America, Kirby controls roughly a third of the market with most competitors consisting of much smaller, local companies.

Back on dry land, Kirby also has a railroad element through its diesel engine services segment. The company provides after-market service for medium-speed and high-speed diesel train engines. Kirby's stock performance has certainly has been stronger than a locomotive, up 30% over the past year, and Hodges' Marshall expects more gains in 2011.

"Kirby has the critical mass in a capital-intensive business, which gives them competitive advantages in dealing with large customers in industries such as petrochemicals. Although they are limited to waterways, barges are like the railroads in that they have a real advantage to see utilization leverage in an improving economy due to the fact that they offer the lowest-cost form of transportation," says Marshall.

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