Avoid Transports Except for a Trade

NEW YORK (TheStreet) -- The transportation sector is overvalued by 24.4% according to www.ValuEngine.com and with 74.3% of the 179 stocks in this sector rated sell or strong sell the sector continues to have an 'avoid-source of funds' rating. Even so the eight transportation stocks I have been profiling as a group can be traded using my buy-and-trade strategy.

In my last post covering these stocks on Aug. 14 I wrote Buy TravelCenters as the Economy Improves I noted that all eight had sell ratings and today six still have sell ratings, while two have been upgraded to hold. For the record TravelCenters of America ( TA) ($7.55) still has a buy rating and is trading between its Aug. 27 low at $7.35 and its 200-day simple moving average at $8.89. My semiannual value level is $7.18 with a weekly pivot at $7.78 and semiannual risky level at $9.32.

Since Aug. 13 three of the eight transportation stocks are down between 1.8% and 4.7%%, while the other five are up between 0.2% and 4.7%. All eight are overvalued by 2.7% to 28.7%. All eight have had positive returns over the last 12 months by 14.2% to 58.9%. All are projected to be lower 12 months from now by 4.2% to 9.1%. All are trading above their 200-day SMAs, which reflects the risk of a reversion to the mean.

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Con-Way ( CNW) ($42.99 vs. $43.80 on Aug. 13) set a multi-year high at $46.52 on Aug. 2 and is on the cusp of its 50-day SMA at 43.06. My weekly value level is $42.40 with a monthly risky level at $46.48.

CSX ( CSX) ($25.36 vs. $25.32 on Aug. 13) traded to a new multi-year high at $26.90 on Sept. 19 and today the stock is below its 50-day SMA at $25.55. The 200-day SMA is $23.98 with a weekly pivot at $25.42 and quarterly risky level at $26.93.

FedEx ( FDX) ($113.69 vs. $108.61 on Aug. 13) traded to a new multi-year high at $118.31 on Sept. 20. My semiannual value level is $105.29 with an annual pivot at $113.72 and semiannual risky level at $123.36.

JB Hunt ( JBHT) ($72.16 vs. $75.47 on Aug. 13) set its multi-year high at $78.39 on Aug. 1 and is now below its 50-day SMA at $74.02 and is just above its 200-day SMA at $71.14. My weekly value level is $70.96 with a semiannual pivot at $72.05 and monthly risky level at $78.04.

Norfolk Southern ( NSC) ($76.82 vs. $74.29 on Aug. 13) set its multi-year high at $81.00 back on May 21 and stayed above its 200-day SMA on June 24 and Aug. 30 with the 200-day now at $73.74. My annual value level is $75.90 with a quarterly pivot at $77.40 and quarterly risky level at $81.28.

Old Dominion Freight ( ODFL) ($46.78 vs. $45.65 on Aug. 13) set a new multi-year high at $47.66 on Sept. 24. My weekly value level is $45.94 with a monthly pivot at $46.37 and quarterly risky level at $52.66.

Union Pacific ( UNP) ($152.73 vs. $160.19 on Aug. 13) set its multi-year high at $165.18 on July 22. The stock is now between its 200-day SMA at $147.61 and its 50-day SMA at $157.34. My semiannual value level is $149.48 with a weekly pivot at $152.02 and semiannual risky level at $167.94.

United Parcel Service ( UPS) ($90.03 vs. $87.71 on Aug. 13) set a new multi-year high at $92.12 on Sept. 20. My semiannual value level is $83.04 with a weekly risky level at $89.75 and monthly risky level at $94.46.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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