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ETF News And Commentary

Encouraged by solid job growth, rising wages, cheap fuel, increased consumer spending and improving economy, travel plans this Thanksgiving are more than what we saw in many years. Las Vegas is expected to be the top destination, followed by San Francisco and San Diego.

According to travel service provider American Automobile Association (AAA), Thanksgiving holiday travel is expected to hit levels not seen in nine years. As many as 48.7 million Americans will travel through roads and skies this Thanksgiving holiday period (Nov 23–Nov 27), up 1.9% from last year. Of them, 43.5 million Americans will take long car trips (up 1.9% from last year), 3.7 million will fly (up 1.6%), and the rest will travel by bus and train (up less than 1%).

In fact, drivers are expected to pay the third cheapest gasoline price in more than 10 years. As per GasBuddy.com, the average national price of gasoline will likely drop to $2.11 per gallon on Thanksgiving Day, up 11 cents per gallon from last year and 26 cents per gallon in 2008 (read: Oil to Stay "Lower for Longer"? Short Oil & Energy ETFs).

Another report from the U.S. airlines group Airlines for America (A4A) shows that about 27.3 million passengers will fly over the 12-day Thanksgiving holiday travel period (Nov 18–Nov 29), up 2.5% from last year. While airfares are likely to increase 21% this Thanksgiving with an average roundtrip flight costing $205, they are still affordable and will drive holiday traffic volumes.

Huge travel demand should boost revenues and profitability for airlines and railroads, thereby leading to higher share prices. Investors’ shouldn’t miss this opportunity and could tap this trend through ETFs and stocks that stand to profit big time from the upbeat Thanksgiving travel trend.

How to Play with ETFs?

Below, we have highlighted three ETFs that belong to the transportation world and could see a spike in the coming days.

iShares Dow Jones Transportation Average Fund (IYT - Free Report)

The ETF provides exposure to the broad transportation sector by tracking the Dow Jones Transportation Average Index. The fund holds a small basket of 20 stocks with heavy concentration on the top firm FedEx. Air freight & logistics takes the top spot at 28.9% while railroads, airlines and trucking round off the next three spots with a double-digit allocation each. The fund has accumulated nearly $1.1 billion in its asset base while sees a good trading volume of around 317,000 shares a day. It charges 44 bps in fees and expenses and has a Zacks ETF Rank of 3 (Hold) with a High risk outlook (read: ETFs to Play 3 Affordable Sectors).

SPDR S&P Transportation ETF (XTN - Free Report)

This fund follows the S&P Transportation Select Industry Index. Holding 46 stocks in its basket with AUM of $242 million, it is well spread out across various components with none holding more than 3.3% of assets. About 30% of the portfolio is dominated by airlines and trucking while airfreight & logistics, and railroads round off the top four with a double-digit allocation each. The fund charges 35 bps in fees per year from investors and trades in a light volume of nearly 43,000 shares a day. It has a Zacks ETF Rank of 3 with a High risk outlook.

U.S. Global Jets ETF (JETS - Free Report)

This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 33 securities that are heavily concentrated on the top four firms with a double-digit allocation each. Other firms hold less than 4.5% share. The fund has gathered $50.1 million in its asset base while sees moderate trading volume of nearly 37,000 shares a day. It charges investors 60 bps in annual fees (read: Like Buffett, Why You Should Find Value in Airline ETF).

How to Play with Stocks?

Using our Zacks Stock Screener, we have chosen stocks that have recently seen their ranks being upgraded to Zacks Rank #1 (Strong Buy) or 2 (Buy) in the railroad and airline industry.

SkyWest Inc. (SKYW - Free Report)

Based in St. George, Utah, SkyWest operates a regional airline in the United States. While earnings are expected to grow 4.1% for the holiday quarter, revenues will likely be flat. The stock has a Zacks Rank #1 with a Momentum Style Score of C. You can see the complete list of today’s Zacks #1 Rank stocks here

Copa Holdings SA (CPA - Free Report)

Based in Panama City, Panama, Copa Holdings through its subsidiaries is a leading Latin American provider of passenger and cargo service. It saw solid earnings estimates revision of six cents for the holiday quarter over the past seven days. Earnings and revenues are expected to grow 78.5% and 5.6%, respectively, for the holiday quarter. The stock has a Zacks Rank #1 with a Momentum Style Score of B.

USD Partners LP (USDP - Free Report)

Based in Houston, Texas, USD Partners is engaged in acquiring, developing and operating energy-related rail terminals and other midstream infrastructure assets and businesses in the United States and Canada. Its earnings are expected to grow at a rate of 33.3% for the holiday quarter while revenue will expand in double digits. USDP has a Zacks Rank #1 and a Momentum Style Score of B (read: 6 ETFs & Stocks to Shower Big Gains This Thanksgiving Week).

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