Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

2 ETFs That May Take Off As Transportation Costs Rise

By Investing.com (Tezcan Gecgil/Investing.com )ETFsFeb 16, 2022 21:28
au.investing.com/analysis/2-etfs-that-may-take-off-as-transportation-costs-rise-200499841
2 ETFs That May Take Off As Transportation Costs Rise
By Investing.com (Tezcan Gecgil/Investing.com )   |  Feb 16, 2022 21:28
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
F
+1.21%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
FDX
+2.05%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PCAR
+0.62%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMZN
+1.67%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CSX
-0.16%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
UNP
-0.36%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Investors typically pay attention to many industry front runners during the earnings season. In early February, one of the names in the limelight was the logistics giant United Parcel Service (NYSE:UPS). The Sandy Springs, Georgia-based company announced record quarterly earnings and a 49% dividend hike.

Wall Street was pleased, and post earnings UPS stock rallied about 15%, hitting a record high of $233.72. But since then, the shares have lost a substantial portion of those gains, closing Tuesday at $217.26, up 1.8% year-to-date (YTD) and 34.5% in the past year.

UPS Weekly Chart
UPS Weekly Chart

Management painted a rosy picture about increased e-commerce demand and higher margins. Moreover, 10% of revenues came from Amazon (NASDAQ:AMZN), a company that also reported blockbuster earnings. Supply chain issues have also meant strong pricing power.

Metrics from UPS helped calm some of the recent anxiety over the outlook for transportation shares. Although it returned 15.4% in the last 12 months, so far in 2022, the widely-followed Dow Jones Transportation Average is down 6.7% as increasing energy and labor costs have become a significant concern in recent months.

Now investors are wondering if UPS' upbeat outlook can help the sector reach new highs in the coming quarters.

Previously we have written about three other exchange-traded funds (ETFs) and now we are introducing two more that could appeal to sector bulls.

It is also worth noting that on Mar. 17 FedEx (NYSE:FDX) will issue Q3 FY22 earnings. Those numbers could provide more insight on how the sector may perform for the rest of the year.

1. First Trust NASDAQ Transportation ETF

  • Current Price: $32.49
  • 52-week range: $29.41 - $36.18
  • Dividend yield: 0.72%
  • Expense ratio: 0.60% per year

The logistics and transportation industry in the United States is highly competitive. As such, many on Wall Street regard the industry as a leading indicator of economic growth.

Its sub-sectors include logistics, air and express delivery services (EDS), freight rail, maritime transportation, and trucking.

Our first fund, the First Trust NASDAQ Transportation ETF (NASDAQ:FTXR) invests in US transportation firms. The fund began trading in September 2016.

FTXR Weekly Chart
FTXR Weekly Chart

FTXR, which has 29 holdings, tracks NASDAQ US Smart Transportation Index. The top 10 holdings account for close to 55% of net assets of $1.13 billion.

In terms of the sub-sectors, we see railroads (17.29%), trucking (16.37%), airlines (15.49%), automobiles (15.73%), and delivery services (8.33%).

Leading holdings include legacy carmaker Ford (NYSE:F); railroad groups Union Pacific (NYSE:UNP) and CSX (NASDAQ:CSX); less-than-truckload (LTL) freight carrier Old Dominion Freight Line (NASDAQ:ODFL); and truck maker PACCAR (NASDAQ:PCAR).

In the past 12 months, FTXR returned 6.1% and hit a record high in early January. However, the fund has come under pressure and lost 6.45% YTD since then.

Despite the recent decline, valuation is still on the rich side. P/E and P/B ratios are 21.91x and 3.33x. Therefore, interested readers may want to wait for a potential pullback toward the $31 level.

2. US Global Sea To Sky Cargo ETF

  • Current Price: $20.85
  • 52-week range: $18.75 - $21.10
  • Expense ratio: 0.60 per year

Recent research titled Transportation & Logistics 2030 by PricewaterhouseCoopers highlights:

“New trade corridors between Asia and Africa, Asia and South America and within Asia will re-chart global supply chains. Trade volumes will shift towards emerging markets, and least developed countries will take their first steps into the global marketplace.”

Meanwhile, about 80% of global trade relies on maritime transportation and global ports. Our next fund, the US Global Sea to Sky Cargo ETF (NYSE:SEA), invests in companies in global sea shipping and air freight segments. It is a new and small fund that was first listed in January 2022. Net assets are around $8.7 million.

SEA Daily Chart
SEA Daily Chart

SEA, which has 29 holdings, tracks the US Global Sea to Sky Cargo Index. Over half of the fund is in the leading 10 stocks.

70% of the names come from marine shipping, while the rest comes from air freight/couriers. Firms from the US have the largest slice, with 27%. Next in line are companies from Hong Kong (19%), Taiwan (14%), Japan (14%), and Germany (7%), among others.

ZIM Integrated Shipping Services (NYSE:ZIM), Orient Overseas International (OTC:OROVY), COSCO SHIPPING (OTC:CICOY), and Nippon Yusen (OTC:NPNYY) lead the names in the portfolio.

SEA started trading on Jan. 20 at an opening price of $20.10. Now it is changing hands at $20.85. As we have already noted, it is a small fund without much trading history. Therefore, interested readers need to do further due diligence before hitting the ’buy’ button.

2 ETFs That May Take Off As Transportation Costs Rise
 

Related Articles

2 ETFs That May Take Off As Transportation Costs Rise

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email