Dow Transports outperform S&P 500, reach new intraday high

Kirby, Matson, and CH Robinson led the charge today

The S&P 500 (SPY) was off slightly today, down 0.05%, but Dow Transports ($DOWT) rallied against the larger market, gaining 0.87% on the day and reaching a new intraday high just above 11,622 this morning. You can check out the Dow Transports live on Barchart.com’s new freight market sector page.

Tank barge operator Kirby Corporation (NYSE: KEX) was the Dow Transports’ biggest mover today, gaining 7.19% on positive analyst reports this morning. Stifel’s (NYSE: SF) Benjamin J. Nolan released a bullish report on Kirby in the early hours of the morning based on a visit to Kirby’s Oklahoma City manufacturing facility. 

“Concerns over slowing in the fracking market has caused a sharp decline in KEX shares over the past month despite good long-term fundamentals in all the business segments,” Nolan wrote. “Yesterday we toured the company’s United Manufacturing facility in Oklahoma and turns out market fears are not only overblown but the business is actually improving. Given this misunderstanding by the market leading to a much more attractive entry point, we would be buyers of the shares at current levels.” 

Shares of Kirby Corporation climbed to $82.10 by press time, still well below Stifel’s new price target at $103.

Matson, Inc. (NYSE: MATX), a Jones Act steamship line, was up 2.4% today, and C.H. Robinson (NASDAQ: CHRW), the largest provider of third party logistics services in North America, gained 1.9% today. Matson Inc. stock is up about 16.6% since May, possibly related to a hyperactive Pacific hurricane season that has repeatedly threatened Hawaii. 

C.H. Robinson, the leading truckload brokerage on the continent, has defended its market share and margins against digital incumbents by investing heavily in technology, including its Navisphere app, and CHRW shares have climbed from their low around $83.50 during the July freight doldrums back up to a healthy $100.38 today, a record price for the stock.

According to a recent Goldman Sachs (NYSE: GS) report by equity analyst Matt Reustle, Navisphere has a 13.9% market share of worldwide trucking app downloads. Other bullish industry fundamentals for brokerage incumbents include a quadrupling of brokerages’ share of total loads since 2000 and the fact that 61% of the brokerage market is still fragmented and shared by small players. In other words, CH Robinson, though it’s the largest 3PL by a factor of three, has plenty of room to grow, and tech-enabled new entrants can also vacuum up market share without affecting CHRW’s business.