The Best Stocks in the Market

This summer, the United States celebrates its 250th anniversary, and it got me thinking—what really drove the creation of this nation? Not the founding documents or the rhetoric, but the actual infrastructure that turned 13 coastal colonies into a continental economic force. It was the railroad that made it happen. These were essentially America’s first stocks, allowing ordinary folks to have a stake in something larger than themselves, which ultimately laid the groundwork for Wall Street as we know it. Interestingly, ticker tape was created to represent railroad fares. Yet, railroads are incredibly capital-intensive. Without the stock market and public interest in investing, these enterprises might never have come to fruition. In 1884, the original Dow index featured 11 stocks, nine of which were railroads, with the other two being steamship lines and Western Union. It’s worth noting that the Dow Transportation Average was the first index, indicating that investors have always been attuned to what these stocks imply about the market.

Currently, transportation stocks are shining during this bull market. We delve into two significant players: Union Pacific (UNP), a transcontinental railroad company in development, and JB Hunt Transport Services (JBHT), North America’s largest intermodal transportation provider. As of June 15, there are 193 companies highlighted in “The Best Stocks in the Market” list, with transportation sector stocks leading the way.

Union Pacific Co. (UNP)

Sean notes that rotation is essential in a bull market. It’s actually quite positive to see profits in sectors outside of tech. Right now, we’re witnessing strength in sectors that are often considered tough, such as transportation and rail. Rail was somewhat mainstream during its peak, with Charles Dow using railroads to gauge bull markets over a hundred years ago. Commissioned by Abraham Lincoln in 1862, Union Pacific—something I hadn’t fully appreciated when I last discussed it in May—is currently developing the first transcontinental railroad by acquiring the Norfolk Southern Railroad. UNP has seen a 21.6% rise over the past year, along with 14.8% over the last six months, and 7.4% in just three months, reflecting a strong, consistent upward trajectory.

The upcoming acquisition of Norfolk Southern, set to create a massive 50,000-mile transcontinental network, involves 225 million shares and $20 billion in cash, pending regulatory approval. UNP has reported record first-quarter sales of $6.2 billion (up 3% year-over-year), with a net income of $1.7 billion (a 5% increase) and adjusted earnings per share (EPS) at $2.93 (up 9%). Revenue increased by 10%, driven by bulk shipments, especially coal and grain going to China and Mexico. The management is optimistic, predicting continued low double-digit EPS growth through 2027.

Josh adds that Union Pacific has been on our radar this year, and it’s clear our earlier instincts are proving correct. Back on May 26, we remarked, “This is a decent risk-reward situation.” The $260 mark has held as support, and the stock has climbed to $273. The recovery from what we called Liberation Day lows appears legit, with buyers stepping up even as we approached the 200-day rally. A significant part of what’s unfolding involves the Norfolk Southern acquisition. Once a deal is confirmed, ARB funds typically go long on the target and short on the acquirer to manage the equity risks. This has resulted in some downward pressure on UNP recently. Once these hedges are unwound, we can expect buying pressure to mount. Of course, there are still risks tied to merger news that could swing in either direction, so it’s good to keep that in mind.

The RSI stands at a neutral 57, fitting well with the current dynamics. Momentum doesn’t seem to be overheating; rather, it appears to be rebuilding, which feels right for a stock in recovery. Traders can use $260 as a baseline; if it dips below, it might be time to reassess. Investors might find value around $248 to $250, as the stock showed solid support there earlier this year before breaking out. A drop below $248 would likely disrupt the upward trend—though, hey, that was just a joke. It would truly mean entering a consolidation phase, and it seems like time is ticking for that.

JB Hunt Transport Services, Inc. (JBHT)

Moving on to JB Hunt, Sean points out that the stock has skyrocketed by 107% over the past year—37.7% in just the last three months, and a solid 20.1% over the last month. That’s some serious momentum. JB Hunt is unique in that it owns trucks and partners with railroads but doesn’t own any rail infrastructure itself. Their core strategy focuses on shifting freight from highways to rails and back. Interestingly, spot charges based on delivery costs have surged since last year, giving a pricing boost due to contract revisions. When you add in increasing volumes, the reasons for the stock’s impressive climb become clear.

Intermodal volumes, which refer to containers moved both ways, are currently breaking records, having risen by 7% year-on-year in March. The eastern segment of JB Hunt’s network is even gaining ground against highway transport (8% growth in Q1). The company also hit its cost-reduction targets, achieving a low-cost execution rate of $130 million against an initial goal of $100 million. JB Hunt appears set for growth, aiming to add between 800 and 1,000 trucks this year, bolstered by favorable regulatory conditions and a solid safety record.

Josh remarks that JB Hunt is close to hitting $300, the price that seemed to resist it last week. Below this level, a 50-day rally has been providing solid support since reaffirming the upward trend from last October’s lows. Buyers have consistently protected this price point, and there’s no indication that will change. The RSI is at 69, often interpreted as an “extension” level, which makes sense given the stock’s steady constructive growth. Keeping the picture clear going into the critical $300 test, traders could maintain stops just below the recent consolidation around $270. For investors, anchoring at the current $253—representing the 50-day mark—is advisable, as it’s acting as a sturdy foundation for the rally. The 200-day moving average is nearly 50% lower than today’s price, but that seems reminiscent of past experiences, so we’ll set that aside for now.