One of the hallmarks of the re-opening trade is that the economy is starting to literally move again through the transportation sector, which is propping up leveraged funds like the Direxion Daily Transportation Bull 3X Shares (TPOR).
Transportation may have come to a screeching halt at the height of the pandemic, but right now, it’s pedal to the metal.
“It’s been an eventful year in logistics, as the global economy ground to a halt and then began to swiftly reopen,” writes Kevin Dowd in Forbes. “Ports around the world have experienced unprecedented backups. Demand for commercial air travel dried up. There’s been a surge of container cargo lost at sea. You might have heard about one very high-profile wrong turn in the Suez Canal.”
“But all that drama has accompanied a boom in demand for shipping and package delivery services driven by the pandemic,” Dowd wrote. “And for some of the industry’s biggest names, that increase has been quite good for business.”
TPOR, which is up 95% on the year, seeks daily investment results that are equal to 300 percent of the daily performance of the Dow Jones Transportation Average. The index measures the performance of large, well-known companies within the transportation industry.
The transportation industry can be a harbinger of an improving economy. The more goods being shipped, the better the overall economy is looking.
FedEx Delivering on the Gains
At close to an 11% allocation, FedEx has been one of the main drivers for gains in TPOR. The company is on Forbes Global 2000 list of the world’s largest.
“The Memphis-based business, which was at No. 513 last year, takes the top spot in the transportation sector from UPS, which landed at No. 165,” the Forbes article noted. “Aided by record-breaking shipping volumes during the holiday season, FedEx reported a 23% year-over-year increase in revenue for its fiscal 2021. Net income rose 183%, and diluted earnings per share were up 175%. More recently, FedEx has helped deliver more than 100 million doses of COVID-19 vaccines to countries around the world.”
The stock is up 19% for the year. Stretch that performance out to the past year, and its share price is up over 600%.
“Our results speak for themselves” said FedEx COO Rajesh Subramaniam in the company’s most recent earnings call. “In December, we achieved the highest monthly totals in our company’s history.”
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