Average transportation has been rising over the past two years and is set to reach new highs this year. Price action in early 2025 is bullish, confirming the trend with a strong signal, including crossovers at critical moving averages. Although it’s not technically a Golden Crossover, the group confirms the trend with a strong signal.
The 9-day moving average is moving above the 150-day and 30-day moving averages, showing short-, medium- and long-term market participants are in line with the market having plenty of room to move higher. There are some risks of resistance at the 16,600 level, but this market is unlikely to decline without a major change in the outlook.
The 2025 freight growth outlook is tepid but includes modest volume and price increases sufficient to maintain a strong capital return outlook. Driven by international demand and consumer strength, growth is expected to be in the upper and mid-single digit range for airlines, trucking and rail.
The latest consumer spending reading shows that retail sales in December outpaced inflation, a sign of demand growth expected to continue into 2025.
The long-term outlook is also good. The shipping industry bottomed out in 2024 and is expected to grow and accelerate over the next four to five years.
There are catalysts that could lead to better-than-expected performance for transportation stocks across the board. President Trump has issued several executive orders to advance his pro-growth agenda. The orders include industry liberalization, tax exemptions, and customs tariffs to boost local production and create jobs. Since the labor market was already in a strong state, tailwinds are likely to form and be seen in the data early in the second quarter.
Broader growth and margins in 2025 for the top 3 transportation stocks
The top three transportation stocks by market cap are Union Pacific New York Stock Exchange: United National PartyUber New York Stock Exchange: UberAnd United Parcel Service New York Stock Exchange: UBS. These three companies are expected to grow in 2025, maintaining the pace in 2024 or accelerating compared to last year. A wider margin is also in the forecast. Uber is likely to lead with 22% net growth, but its profits are all expected to grow by double digits. Uber stands out for its margin improvements and increased cash flow. It began buying back shares in 2024 aggressively and is likely to maintain a healthy pace in 2025.
Analyst trends lift these transportation stocks. All are rated as Moderate Buy, with double-low to high-double digit upside indicated in the consensus. Crucial takeaways from the data include increased coverage, warming sentiment, and expectations of new highs for several years or at all in 2025. Analysts are cooler on UNP but still see at least a 10% rise this year.
Uber doesn’t pay a dividend, but UNP and UPS stocks do, and the yields are attractive. UPS is a high-yielding name offering more than 5% annually, with shares trading near mid-January levels. Its payouts are reliably safe but are likely to grow at a slow pace due to a higher-than-desired payout ratio.
The company will pay about 85% of its profits in 2024, a red flag tempered by growth expectations. The payout ratio will decline in 2025 and continue to decline until the end of the decade. Union Pacific is also high-yielding compared to the S&P 500, paying about twice as much as the broad market. Its payouts are considered more reliable at just 50% of earnings and are likely to increase this year at a high-single-digit pace.
Delta Air Lines is a good transportation stock
delta airlines today
Delta Airlines
- 52 week range
- $36.69
▼
$68.99
- Dividend yield
- 0.91%
- P/E ratio
- 12.35
- Price target
- $78.22
Delta Airlines New York Stock Exchange: D It is the seventh-largest transportation stock by market capitalization and among the top stocks that could gain strength in 2025. Its business has exposure to consumer and business travel and the shipping industry; All three are strong. Travel demand and revenue reached record levels in 2024, driven by industry-leading loyalty and premium services, and are expected to reach new highs in 2025.
The company’s guidance expects strong travel demand in 2025 centered around higher-margin premium services. An important takeaway from 2024 is that cash flow is improving, allowing debt to be reduced and dividends to resume. Dividends are still below the 2019 level but are on track for a strong increase in 2025 and 2026.
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