Airlines are also a significant part of IYT’s lineup. There are encouraging fundamental factors for airlines, including low oil prices. Fuel is the largest input cost for airlines. The improving U.S. economy could encourage more business and leisure travel and airlines are generating impressive amounts of cash.
The U.S. Global Jets ETF (NYSEArca: JETS), which has also recently been struggling, is also showing signs of rebound potential. JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
“Decades ago, it appeared transportation and technology stocks could not be more different, but a correlation between the groups is growing as e-commerce expands at a rapid clip,” reports CNBC, citing Michael Bapis, partner and managing director at the Bapis Group at HighTower Advisors. “As the connection between companies like Amazon and shipping firms intensifies, transport stocks should be favored for the long haul. Dips should be bought for the next year to 18 months.”
For more information on Transportation ETFs, visit our Transportation category.