On CNBC’s “Trading Nation,” Craig Johnson of Piper Sandler said that the downturn in the Dow Jones Transportation Index seems to be over, with some strength expected in transportation stocks ahead.
Johnson also pointed out that railroads constitute around a third of the entire Dow Jones Transportation Index, with airlines representing just 16% of the index.
With oil prices surging above $80 per barrel, railroads could benefit from that trend due to the higher movement of freight and coal.
He also mentioned that prices of airline tickets are moving higher due to accelerating inflation and higher oil prices. Looking at all this, Johnson expects Kansas City Southern KSU to break to the upside. The company is scheduled to release quarterly earnings Tuesday before the opening bell.
Price Action: Kansas City Southern shares gained 3.1% Friday to close at $295.59.
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