Watch these Stocks at JPMorgan Chase & Co. (JPM)’s Aviation, Transportation, & Defense Conference: Lockheed Martin Corporation (LMT), Landstar System, Inc. (LSTR)

Transportation Stocks
Tuesday, March 5 (WERN 8:00 a.m.; HTLD 8:45 a.m.; KNX 9:30 a.m.)

While I alluded in the introduction that I am decreasing my overall risk level, transportation is one beta area I continue to increase exposure. These stocks are not “defensive” in nature and should only be bought if you are a believer in the trucking expansion cycle.

Freight activity and trucking are cyclical in nature, and recent data points indicate that truck utilization continues to increase. Wall Street is also betting that tractor trailer stocks will push higher.

Analysts at KeyBanc upgraded Heartland Express and Knight Transportation to Buy from Hold on February 11.

Truckload (TL) and less than truckload (LTL) pricing is expected to increase in the low-single digits excluding any fuel related surcharges. Furthermore, truck capacity which was shed during the 2008-09 recession is not coming back, which supports higher prices due to limited availability.

The Cleveland, OH based KeyBanc set a $16 price target on Heartland and $19 target on Knight. Both companies are presenting on Tuesday at J.P. Morgan’s conference.

Werner Enterprises (NASDAQ:WERN) is another trucker presenting on Tuesday. Bank of America Merrill Lynch upgraded the stock following improved data points and higher confidence among truckers based on its internal survey. The price target on Werner Enterprises was raised to $27 from $23.

Foolish Bottom Line

Historically, defense stocks have outperformed the broader market in the event of a pullback. Lockheed Martin is my favorite among the group, and the company’s solid dividend limits the downside risk in my opinion. Finally, while not defensive in nature, transportation companies such as Heartland, Knight, and Werner are poised to benefit from structural changes in the trucking business.

Readers can view the agenda for J.P. Morgan’s three-day conference on the bank’s website.

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The article Watch these Stocks at J.P. Morgan’s Aviation, Transportation, & Defense Conference originally appeared on Fool.com.

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