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Transportation Sector Is Ready For Takeoff

The iShares Transportation Average ETF (NYSEARCA:IYT) is taxiing on the runway, preparing for what appears to be an imminent takeoff. The engines have been revving since Nov 7, 2016 when Trump won the presidential election. With inflation starting to show signs of life, the job market firming up and the anticipation of Trump's policies (infrastructure spending, decreased regulations and manufacturing jobs), the transportation industry is ready to fly. The IYT share price is near an all-time high, sitting comfortably above long term support.

The iShares website lists the P/E Ratio for IYT at 18.7. Using Portfolio123, I estimated the forward-looking P/E Ratio of the DJ transportation stock universe to be 16.7, nowhere near the high of 19 seen back in late-2014. Therefore, I don't consider transportation stocks to be overly-expensive at present.

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by Steve Auger