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The Zacks Analyst Blog Highlights: Matson, GATX, Westinghouse, Greenbrier and Fly Leasing

Zacks Equity Research
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For Immediate Release

Chicago, IL –October 22, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Matson Inc. MATX, GATX Corp. GATX, Westinghouse Air Brake Technologies Corp. WAB, The Greenbrier Companies Inc. GBX and Fly Leasing Ltd. FLY.

Here are highlights from Friday’s Analyst Blog:

Will the Bull Run Continue for Transport Services?

The diversified transportation sector, which includes airline operators, railroads, truckers and shippers, to name a few, performed well in the first half of 2018. Strong U.S. economic fundamentals and substantial surge in manufactured and retail goods are anticipated to fuel the transportation sector’s growth. Consequently, the companies offering equipment financing and leasing, logistics and supply chain management services to transporters have also rebounded in 2018.

Growth Inducing Polices

As the U.S. economy continues to grow, demand for carriage is also increasing and this momentum is anticipated to sustain in the rest of 2018. The two pro-growth agendas of President Trump, namely, significant cut in corporate tax and deregulation are major catalysts to the transportation sector.  

Massive reduction in corporate taxes from 35% to 21% has brought corporate tax rate to its lowest level in 78 years. A large part of transporters book much of their revenues within the United States. Consequently, a significant reduction in corporate tax rate borne by these companies would be immediately accretive to cash flow.

Strong U.S. Economic Fundamentals

U.S. GDP grew at 4.2% in the second-quarter of 2018, marking its highest gain since the third quarter of 2014 and the third-best growth rate since the Great Recession of 2008-2009. In the second quarter, consumer spending increased 4%, business investment grew 7.3% and government spending rose 3.5%.

In the first half of 2018, the U.S. GDP grew at 3.2%, better than the Trump administration’s target level of 3%. Moreover, the unemployment of 3.7% is at its lowest since December 1969. Average wage rate increased 0.5% in August, the fastest pace since January. Despite wage growth, the core PCE index (excluding food and energy) - Fed’s preferred gauge of inflation measure - remained steady at 2%.

Additionally, both manufacturing and services sectors are growing at steady pace and consumer confidence is at its peak. Further, U.S. factory made goods in August rose 2.3%, marking its highest gain since September 2017.

Fed Raises GDP and Job Estimates

On Sep 26, the Fed raised forecast for 2018 and 2019 GDP growth from the 2.8% and 2.4% stated in June to 3.1% and 2.5%, respectively. Although the Fed raised its unemployment rate projection for 2018 from 3.6% to 3.7%, it is still lower than the current rate of 3.9%.

Projections for 2019 and 2020 remained unchanged at 3.5% while the first estimate for unemployment rate in 2021 is pegged at 3.7%. This indicates that the U.S. labor market will maintain near full employment levels over 2018-2021.

Performance of Major Transport Services Providers

Year to date, stock price of six major transport service providers, Matson Inc., GATX Corp., Westinghouse Air Brake Technologies Corp., The Greenbrier Companies Inc. and Fly Leasing Ltd. outperformed the broad market S&P 500 index.

Bottom Line

The transportation sector seems to be positioned well not only in the near term but also in the long haul due to robust freight demand on the back of a buoyant economy. Consequently, growth potential of transportation services stocks is also bright.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Fly Leasing Limited (FLY) : Free Stock Analysis Report
GATX Corporation (GATX) : Free Stock Analysis Report
Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
Matson, Inc. (MATX) : Free Stock Analysis Report
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