This summer marks the 250th anniversary of the United States, and the actual physical infrastructure that turned 13 coastal colonies into a continental economy was the railroads. They were America’s first stocks, the original reason ordinary people could own a piece of something bigger than themselves, and the reason Wall Street exists in the form it does today. The ticker tape was literally invented to transmit railroad prices.
But railroads were incredibly capital-intensive. Without the stock market and the public’s enthusiasm for investing in these ventures, they never would have been built. The original Dow index from 1884 had 11 stocks in it, and nine of them were railroads.
The bull market is rotating, and transports are showing up prominently right now. Three stocks—Union Pacific, J.B. Hunt Transport Services, and CSX Corporation—represent different approaches to benefiting from infrastructure strength and economic growth.
Why Transportation Stocks Matter in Bull Markets
Transportation stocks serve as economic bellwethers. Railroad volumes, trucking activity, and freight movement reflect underlying economic health. When businesses are expanding and consumers are spending, transportation demand increases. When economic growth slows, transportation activity declines.
This relationship gives transportation stocks predictive power. The Dow Transportation Average was actually the first index and investors have always paid attention to what these stocks were telling them about economic direction. Charles Dow used railroads to validate bull markets over a century ago—a principle that remains valid today.
Transportation stocks also benefit from infrastructure investment and long-term secular trends. The modernization of rail networks, adoption of intermodal shipping (combining rail and truck transportation), and international trade expansion create multi-year growth runways. These aren’t fast-growth technology stocks, but they’re businesses with predictable cash flows benefiting from infrastructure cycles.
When bull markets rotate away from concentrated leadership (typically technology), investors often move into cyclical sectors with improving fundamentals. Transportation stocks are benefiting from this rotation because freight volumes are rising, pricing power is improving, and capital returns to shareholders are accelerating.
Union Pacific Corporation (UNP) trades around $261 and represents the largest story in transportation—the creation of America’s first true transcontinental railroad from coast to coast. The company is chartered by Abraham Lincoln in 1862 and is now attempting to build that original vision by acquiring Norfolk Southern.
The pending Norfolk Southern acquisition, which would create a 50,000-mile transcontinental network, involves $20 billion in cash plus the issuance of 225 million shares, pending regulatory approval. This merger would fundamentally reshape the American railroad landscape, creating unprecedented cross-country connectivity from coastal ports to inland markets.
The fundamental case for Union Pacific is compelling independent of the merger. UNP posted a record first quarter with revenue of $6.2 billion (+3% YoY), net income of $1.7 billion (+5%) and adjusted EPS of $2.93 (+9%). Bulk transportation led the way, with revenue up 10% on 12% volume growth driven by coal and grain exports to China and Mexico.
Volume growth of 12% on revenue growth of 10% indicates improving pricing power. When volumes grow faster than revenue, it means the company is capturing higher prices per shipment. This margin expansion demonstrates Union Pacific’s ability to pass cost increases through to customers while maintaining volume growth.
Management affirmed a low double-digit EPS compound annual growth rate through 2027, with mid-single-digit EPS growth expected in the coming year. This guidance provides visibility into earnings expansion extending years ahead, supporting the bull case for the stock.
From a technical perspective, UNP is up 21.6% over the past year, 14.8% over the last six months, and 7.4% over the last three months, putting it in a nice, consistent uptrend. The $260 breakout held as support, and the stock has since pushed higher.
The recovery off the lows where buyers stepped up almost to the day at the rising 200-day has proven to be the real thing. Part of what’s been working in the background is the pending acquisition of Norfolk Southern. When a deal is announced, arbitrage funds go long the target and short the acquirer to hedge the stock component of the transaction. That short pressure on UNP has been a quiet headwind for months. As those hedges get unwound, the short covering shows up as additional buying pressure in the stock.
RSI at 57 is neutral and fits the chart. Momentum is rebuilding, not running hot, which is exactly what you’d expect from a stock still working through a recovery phase. There’s still merger-related news risk in either direction, but the technical setup supports continued upside.
J.B. Hunt Transport Services, Inc. (JBHT) trades around $275 and has been a monster—up 107% over the past year, 37.7% in the last three months and +20.1% in the last month alone. This intermodal carrier owns trucks and contracts with railroads to convert freight from highway to rail and rail to highway, creating a diversified transportation platform.
The fundamental tailwinds have been substantial. Spot rates tracking the cost of shipping have risen sharply since late Q4, providing a tailwind for pricing as contracts reprice. Add in the incremental volume and you begin to understand why the stock is up 107% over the past year.
Intermodal volumes (shipping containers back and forth) are at record levels, with March up 7% year-over-year and the Eastern portion of their network is gaining share from highway shipping (8% in Q1). This represents fundamental market share gains as JBHT converts highway freight to more efficient rail-based intermodal transportation.
JBHT also exceeded its cost reduction target, hitting a $130 million run rate in lower costs versus a $100 million goal. This demonstrates management’s operational excellence and ability to drive margin expansion through efficiency initiatives.
JBHT is gearing up for growth, targeting 800–1,000 truck additions this year supported by regulatory tailwinds and JBHT’s strong safety record. These truck additions represent capacity expansion that should support volume growth in coming periods.
Technically, JBHT is knocking on the door of $300, a round-number level that threw a blanket over the stock on an intraday basis previously. Beneath the price there’s a rising 50-day acting as a reliable floor since the uptrend reasserted itself off the October lows. That’s the level buyers have consistently stepped up to defend.
RSI at 69 is extended by traditional measures, but given how long this stock has been constructively building, it’s understandable. Momentum has stayed elevated without flashing exhaustion signals, which keeps the technical picture clean. The $300 level represents a decisive test that could unlock the next leg of the move.
CSX Corporation (CSX) trades around $46 and represents a third approach to benefiting from transportation growth. Shares have surged 45.5% over the past year, outperforming the transportation-rail industry’s 22.5% growth, demonstrating CSX’s ability to outperform peers.
CSX and other railroads are benefiting from the upgraded Southeast Mexico Express (“SMX”) service, as faster transit times, expanded market access and improved network efficiency are introduced. Backed by infrastructure investments, cross-border connectivity between the U.S. Southeast, Texas and Mexico is being strengthened, potentially driving additional freight volumes and supporting long-term growth.
This international trade corridor represents a multi-year growth opportunity. As cross-border commerce expands and Mexico becomes increasingly important to North American supply chains, CSX’s network position benefits directly. The SMX service provides rail’s answer to trucking’s speed and flexibility while retaining rail’s cost and capacity advantages.
CSX continued to broaden its growth opportunities by adding 85 new or expanded rail-served facilities and maintaining a robust pipeline of customer development projects across its network. At the end of 2025, the company broadened its market reach through new intermodal and interchange agreements while returning $2.4 billion to shareholders through dividends and share repurchases.
An 8% dividend increase, combined with ongoing investments in artificial intelligence and predictive analytics, highlights management’s confidence in the company’s long-term growth, productivity and cash-generation potential. The dividend increase demonstrates commitment to shareholders while investments in AI/analytics suggest operational improvements ahead.
The company delivered notable improvements in safety and service performance. Its FRA personal injury frequency index improved to 0.94, while its train accident rate improved to 3.08, reflecting a strong focus on employee safety and operational discipline. Network performance metrics, including train velocity, terminal dwell and trip-plan performance, also improved throughout 2025, providing a stronger foundation for service reliability and customer satisfaction.
Driven by these fundamentals, the Zacks Consensus Estimate for full-year 2026 and 2027 has been revised upward by 3.26% and 3.37%, respectively, over the past 60 days. This analyst estimate revision demonstrates growing confidence in CSX’s growth prospects.
Technically, CSX is up 45.5% over the past year, representing consistent outperformance. The stock has built a constructive chart pattern with higher lows and higher highs, supporting continued appreciation. The lower absolute price point compared to UNP and JBHT provides different risk-reward characteristics.
