Railroad shippers are much more positive about the U.S. economy this year than last, and that could mean a good year for the railroads and the trucking companies that literally piggyback shipments on them.
"This is the most positive I've seen [railroad shippers] in quite some time on the broader economy," said Jason Seidl, transportation analyst at Dahlman Rose & Co., which conducts a quarterly survey.
He said with the exception of coal, he sees an increase in shipments on the railroad or intermodally from chemical, metals, building products, and forest products.
But the decrease in coal shipments "is obviously a concern of ours when you look at the railroads," as they make up between 7 percent and 29 percent of railroad revenue based on the rail company, Seidl said, adding "but we've known that for quite some time."
Seidl said he is "neutral" on transports, with his ratings evenly split between "buy" and "sell" ratings.
Dan Fitzpatrick, presidnet of Stockmarket Mentor, said that while transports look fine now, he continues to look for potential trouble.
"You look at some of the coal stocks," such as Patriot Coal and Arch Coal and "they’ve all been trading down quite a while, even though other basic materials like steel and copper are starting to trade higher," he said, adding, "You have to go with the trend and now coal is moving lower and that is the canary in the coal mine" where railroads are concerned.
Truckers, however, such as Landstar System and J.B. Hunt Transport Services, continue to move higher, Fitzpatrick noted.
"They’re in pretty nice uptrends," he said. While he is "pretty bullish on the market," sometimes I think the biggest red flag is no red flag."
Additonal News: Patriot Coal Cuts Production on Weak Demand
Additional Views: Jefferies Raises Landstar System Price to $51 from $43 a Share
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Disclosure information was not available for Jason Seidl, Dan Fitzpatrick, or their companies.