FedEx, Union Pacific Named Top Picks as Citizens Initiates Transportation Coverage

Citizens has initiated coverage of the transportation and logistics sector with a bullish outlook, naming FedEx and Union Pacific among its top large-cap picks as it anticipates a new upcycle in the freight market. The firm's analysis points to an earnings recovery and sustained momentum for the group through late 2027.

Top Picks and Ratings

In a note led by analyst Jeff Kauffman, the firm began coverage on twenty-two companies with a mix of Market Outperform and Market Perform ratings, issuing no Market Underperform ratings at this time.

Key large-cap companies designated as top picks include:

• FedEx (FDX)
• Union Pacific (UNP)
• FTAI Aviation (FTAI)
• C.H. Robinson (CHRW)

Among mid- and small-cap names, Citizens highlighted GXO, U-Haul parent UHAL, Knight-Swift, Wabash National, and Covenant Logistics as favored stocks.

A New Freight Cycle Begins

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Citizens' positive stance is based on the view that the industry is emerging from "one of the longest freight market declines" into a new growth phase. Kauffman wrote that the early part of an economic recovery is historically one of the most opportune times to own transportation stocks.

The firm identified several catalysts supporting this upcycle, including tight truck capacity and low inventory levels that necessitate restocking. It also pointed to six consecutive positive Purchasing Managers' Index (PMI) readings this year, which followed 38 months of negative readings, as a key indicator of renewed strength.

Economic Outlook and Performance

Underpinning its sector view, Citizens forecasts real U.S. GDP growth of 2.3% in 2026, slowing moderately to 2.1% in 2027. This economic backdrop is expected to drive low-single-digit growth for rail freight and low-to-mid-single-digit growth for trucking.

The stocks in the firm's new coverage group have already demonstrated significant strength, generating average year-to-date returns of 33.8%. This performance substantially outpaces the 20.0% return of the Russell 2000 and the 10.7% gain of the S&P 500 over the same period, according to the note.