(This is “The Best Stocks in the Market,” brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) JOSH — This summer marks the 250th anniversary of the founding of the United States, and I’ve been thinking about why this country was created. Not founding documents or rhetoric, but the actual physical infrastructure that transformed 13 coastal colonies into a continental economy. It was a railroad. These were America’s first stocks, the first reason ordinary people could own a piece of something bigger than themselves, and the reason Wall Street exists in the form it is today. Ticker tape was literally invented to convey railroad fares. But railroads were (and still are) incredibly capital intensive. Without the stock market and the public’s enthusiasm for investing in these businesses, these businesses would never have been built. The original Dow index in 1884 included 11 stocks, nine of which were railroads (the other two were steamship lines and Western Union). In fact, the Dow Transportation Average was the first index, and as Sean explains, investors have always focused on what these stocks are telling us. Bull markets are cyclical, and transportation stocks are currently on the list of the best stocks in the market. We basically explain what’s going on at Union Pacific (UNP), a transcontinental railroad company under construction, and JB Hunt Transport Services (JBHT), North America’s largest intermodal transportation company. And of course, the charts. Let’s go Knicks. As of June 15, there are 193 names on “The Best Stocks in the Market” list. Top Industries: Top 5 Blue-chip Stocks by Relative Strength: Sectors to Watch: Transportation Union Pacific Co. (UNP): Sean — Rotation is the lifeblood of a bull market. It’s not a bad thing to have positive non-tech profits. We are currently seeing strength in tough areas of the market, such as transportation and rail. In fact, rail was semi-mainstream at the time. Charles Dow used rails to test bull markets over a century ago. Chartered by Abraham Lincoln in 1862, Union Pacific (which I knew nothing about when I last wrote about it in May) is now building America’s first transcontinental railroad from coast to coast by acquiring the Norfolk Southern Railroad. UNP is up 21.6% over the past year, 14.8% over the past 6 months, and 7.4% over the past 3 months, with an impressive and consistent upward trend. The bull market is intact. The pending acquisition of Norfolk Southern, which would create a 50,000-mile transcontinental network, includes an issuance of 225 million shares in addition to $20 billion in cash, pending regulatory approval. UNP had record first quarter sales of $6.2 billion (up 3% year over year), net income of $1.7 billion (up 5%) and adjusted EPS of $2.93 (up 9%). Revenues rose 10%, driven by bulk shipping, with volumes up 12% driven by coal and grain exports to China and Mexico. Management confirmed that it expects to maintain a low double-digit EPS CAGR through 2027 and mid-single-digit EPS growth next year. Josh — We’ve been watching Union Pacific closely this year, and that hypothesis is coming true. On May 26th, we wrote to you: “This is a decent risk-reward for the trade. We’re taking a 5-point risk to see if this breakout sticks. We just want to keep an eye on that situation as any merger-related news could impact the price.” The $260 breakout held as support, and the stock subsequently rose to $273. The recovery from the Liberation Day lows proved to be genuine, with buyers bidding up until almost the day of the 200-day rally. Part of what’s going on behind the scenes is the pending acquisition of Norfolk Southern. Once a deal is announced, ARB funds go long the target and short the acquirer to hedge the equity portion of the deal. This short-term pressure on the UNP has been a quiet headwind in recent months. When these hedges unravel, short covering appears as further buying pressure on the stock price. There is still merger-related news risk in either direction, so it’s worth keeping that context in mind. The RSI is neutral at 57 and fits the chart. Momentum isn’t overheating, it’s rebuilding, which is exactly what you’d expect from a stock that’s still doing well after a recovery phase. Traders can still use $260 as a line. Anything less than that would be a reason to step aside. Investors were able to take advantage of the $248-$250 area, and the stock found support twice in mid-April before the breakout began. A break below $248 will derail the uptrend (just kidding) and UNP will enter a consolidation phase for which time and patience are running out. JB Hunt Transport Services, Inc. (JBHT): Sean — JB Hunt stock is up an impressive 107% over the past year, 37.7% over the past three months, and +20.1% in the last month alone. This started to work. JBHT owns the trucks and contracts with the railroads (it does not own the railroad infrastructure). The core strategy is to actually divert freight from highway to rail and from rail to highway. Spot rates, which track transportation costs, have been rising sharply since the second half of the fourth quarter, providing a tailwind for pricing as contract prices change. Add in the incremental volume and you start to understand why the stock is up 107% over the past year. Intermodal volumes (containers transported both ways) are at record levels, up 7% year-on-year in March, with the eastern part of the company’s network gaining share from highway transport (8% in the first quarter). JBHT also achieved its cost reduction goals, achieving a low-cost execution rate of $130 million against a $100 million goal. JBHT is gearing up for growth, with a goal of adding 800 to 1,000 trucks this year, supported by regulatory tailwinds and JBHT’s strong safety record. Josh – JB Hunt Transport Services is knocking on the door of $300, which is roughly the level that would repel the stock on an intraday basis last week. Below the price, we see a 50-day rally that serves as a reliable floor since reaffirming the uptrend from the October lows. This is the level buyers have consistently stepped up their defenses at, and there is no reason to expect it to change. The RSI is 69, which is usually referred to as an “extension,” which is understandable considering how long this stock has been building constructively. Just keep that in mind. Momentum remains elevated without any depletion signals that would cause a pause, keeping the technical picture clean heading into the decisive test of $300. Traders who want to play this can hold their stops just below the recent consolidation near $270. Investors can anchor at the current $253 50-day mark, which is acting as a structural floor for this entire rally. 200 days is almost 50% lower than today’s price, but that may be the same as what happened in Guam, so we are not focusing on that. Disclosure: We currently own shares in JBHT for clients of Porterhouse Strategies. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. 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