Transport ETFs & Stocks to Surge on Busy Thanksgiving Travel

A higher number of Americans are gearing up for Thanksgiving travel by road or air encouraged by a booming economy, higher wages, rising consumer confidence and increasing levels of household wealth. The frenzy for trips during the Thanksgiving weekend is far more than the other years.

According to travel service provider American Automobile Association (AAA), Thanksgiving holiday travel volume in airports, train stations and roads will be the highest since 2005. As many as 54.3 million Americans will travel 50 miles or more this Thanksgiving weekend (Nov 21-Nov 25), up 5% from last year. Of them, 48.5 million (up 5% from the last year) will go on road trips, 4.27 million (up 5.4%) will fly, and the remaning 1.48 million (up 1.4%) will travel by trains, buses and cruises (read: Transport ETFs Look Bright Post Solid Q3 Earnings).

Though road trips are projected to see an increase, motorists are expected to pay the highest gas prices in four years. National average gas price as of Nov 1 was $2.79, up 31 cents from last year. However, travelers’ wallets will find some relief when paying for car rentals, and mid-range hotels. This is because the average daily car rental rate of $63 is 10% cheaper than last year, per AAA’s Leisure Travel Index. Meanwhile, AAA Three Diamond hotels are 6% cheaper than last year at an average rate of $166 per night, while AAA Two Diamond hotels are priced 6% higher with an average nightly cost of $124.

Another report from the U.S. airlines group Airlines for America (A4A) shows that a record 30.6 million passengers will fly over the 12-day Thanksgiving holiday travel period (Nov 16-Nov 27), up from 29 million last year. The busiest day will be Nov 25. The other busiest days for air travel will be Nov 21 and Nov 16 (read: Will Airlines ETF Keep Gaining Altitude Ahead?).

Huge travel demand should boost revenues and profitability for airlines and railroads, thereby leading to higher share prices. Investors shouldn’t miss this opportunity and could tap this trend through ETFs and stocks that stand to profit big time from the upbeat Thanksgiving travel trend.

iShares Transportation Average ETF IYT

The fund tracks the Dow Jones Transportation Average Index, giving investors exposure to a small basket of 20 securities. It is heavily concentrated on the top firm FedEx (FDX) at 13.1%, while other firms account for less than 9.7% share. From a sector perspective, air freight & logistics takes the top spot with 29.1% of the portfolio while railroads, airlines and trucking round off to the next three spots with double-digit exposure each. The fund has accumulated nearly $678.2 million in AUM while sees solid trading volume of around 215,000 shares a day. It charges 43 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

SPDR S&P Transportation ETF XTN

This fund tracks the S&P Transportation Select Industry Index, holding 43 stocks in its basket with none holding more than 3.05% of assets. About 32% of the portfolio is dominated by trucking, while airlines takes 26.6% share. Airfreight & logistics, and railroads also make up for a double-digit allocation each. With AUM of $187.1 million, the fund charges 35 bps in fees per year from investors and trades in a lower volume of around 27,000 shares a day. XTN has a Zacks ETF Rank #3 with a High risk outlook (read: Top-Ranked Sector ETFs & Stocks to Buy Now).

First Trust Nasdaq Transportation ETF FTXR

This fund offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. Each firm holds less than 9% share in the basket. FTXR has accumulated $2.4 million in its asset base and charges 60 bps in annual fees. Average trading volume is meager at 1,000 shares. The ETF has a Zacks ETF Rank #4.

U.S. Global Jets ETF JETS

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 34 securities that are heavily concentrated on the top four firms with double-digit allocation each. Other firms hold less than 4.7% share. The fund has gathered $92.2 million in its asset base while sees moderate trading volume of nearly 23,000 shares a day. It charges investors 60 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook (read: Oil Price on Longest-Ever Losing Streak: 5 ETF Zones to Benefit).

Spirit Airlines Inc. SAVE

Based in Miramar, FL, Southwest Airlines provides low-fare airline services. The company is expected to see earnings and revenue growth of 9.9% and 23.26%, respectively, for the holiday quarter. The stock has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Union Pacific Corporation UNP

Based in Omaha, Nebraska, Union Pacific operates railroads in the United States. It offers transportation services for agricultural products, including grains, commodities produced from grains, and food and beverage products; automotive, such as finished vehicles and automotive parts; and chemicals comprising industrial chemicals, plastics, fertilizers, petroleum and liquid petroleum gases, crude oil, and soda ash. Its earnings are expected to grow 35.41% for the holiday quarter and revenues will likely see modest growth of 7.7%. The stock has a Zacks Rank #2.

CSX Corporation CSX

Based in in Jacksonville, FL, CSX Corporation is premier transportation company providing rail, intermodal, and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural and consumer products. Its earnings and revenues are expected to grow 65.65% and 7.34%, respectively, for the holiday quarter. The stock has a Zacks Rank #1 (see: all the Industrials ETFs here).

Hertz Global Holdings Inc HTZ

Based in Estero, FL, Hertz Global operates car rental business. The company's product and services consists of Hertz Gold Plus Rewards, NeverLost(R), Carfirmations, Mobile Wi-Fi and unique vehicles offered through the Adrenaline, Dream, Green and Prestige Collections. Its earnings are expected to grow at a rate of 45.3% for the holiday quarter while revenues will increase in mid single digits. The stock has a Zacks Rank #2.

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