Positive Outlook Boosts Transportation Shares

NEW YORK (AP) ⿿ Shares of several transportation companies rose on Friday, and one analyst laid out the case for why worries about transportation may be overdone.

Stifel Nicolaus analyst David G. Ross wrote that industry growth at the moment is minimal, with retailers cautious and keeping inventories low, and West Coast imports slowing.

Any easing of economic fears "should lead to a nice pickup in demand, in our opinion, as there is no housing bubble left to pop, no auto bubble left to pop, fuel prices have been declining (which is a decent tailwind for consumer spending), unemployment is relatively stable, borrowing rates are expected to remain low and the population is growing," he wrote. "That's why our fear of a recession is less than others. We could be wrong, but we still see more upside than downside over the next couple of years."

Also, the economic uncertainty is causing trucking companies to limit capacity. That will help them keep prices higher for longer, he wrote.

Even in the spring, as an economic recovery appeared under way, transportation companies including truckers and airlines were dealing with high fuel prices. Those prices appear to be falling now ⿿ but they were driven lower by economic fears, which aren't helping transportation companies, either.

Ross said good management, stable balance sheets, and strong positions in the industry should help FedEx Corp., Old Dominion Freight Line Inc., Heartland Express Inc., and Ryder System Inc. Swift Transportation Co. should benefit if the economy grows, he wrote.

FedEx shares rose 72 cents to $80.60 in afternoon trading. Old Dominion rose $1.49, or 5 percent, to $32.49, Heartland Express rose 36 cents, or 2.6 percent, to $14.17, Ryder rose 83 cents to $46.43. Swift jumped 48 cents, or 6 percent, to $8.41.

Other transportation shares rising included United Parcel Service Inc., up 65 cents to $65.37, and Union Pacific Corp., up 86 cents to $92.84.

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