Jefferies sees a buying opportunity in this S&P 500 sector

Investing.com -- Jefferies said a divergence between rising earnings and falling share prices across the transport and logistics sector has created an attractive buying window, arguing the pullback reflects a position unwind rather than any deterioration in fundamentals.

Analyst Stephanie Moore wrote in a note that one of the strongest freight quarters in years saw "beats and raises across nearly every mode reaffirm the upcycle," yet outside the rails most stocks gave back 10% to 30% from intra-quarter highs.

Jefferies read this "as a well-owned group unwinding a big run, not a fundamental crack," with rails, less-than-truckload carriers and brokers all showing accelerating volumes and tightening supply into the third quarter.

On rails, Jefferies said the clearest signal was volume growth "both accelerating and broadening," with strength in non-tariff-sensitive grain, food, metals and chemicals pointing to a broader demand recovery that carried into July and August. In LTL, it flagged a volume inflection alongside operating leverage, including "XPO's first-ever sub-80 OR."

Moore noted that fears around nuclear verdicts and broker liability drove sharp selloffs in C.H. Robinson and RXO "despite strong execution," a reaction it views as disproportionate. It also called GXO "misunderstood-and-undervalued" after a roughly 10% selloff, noting record new business wins.

With multiples reset to or below long-term averages and fundamentals firming, Jefferies said "the pullback is a buying opportunity." Its favorite ideas remain XPO, ArcBest, CSX, Canadian National, RXO and GXO, names it sees as levered to strengthening freight momentum through the second half of 2026 and 2027.

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