Transportation stocks, projected to boost profits more than three times as much as the S&P 500 in 2013, climbed 24 percent so far this year and reached a record July 19. Delta, the second-largest carrier by passenger traffic, rose 71 percent as the Atlanta-based company beat profit estimates. Delta should increase earnings 46 percent for the full year, according to analyst forecasts.
Union Pacific Corp., the largest U.S. railroad, rose 30 percent this year, 11 percentage points more than the S&P 500. The Omaha, Nebraska-based company has posted 14 consecutive quarters of earnings growth. Annual per-share earnings should rise 15 percent a year in 2013 and 2014, estimates show.
“All of these things tie in together,” Phil Orlando, New York-based chief equity strategist at Federated Investors who helps manage $380 billion, said in a July 17 phone interview. “Because the market is a forward-looking discounting mechanism looking out a couple to three quarters, this tells us that this economic and stock-market rally would improve.”