Tag Archives: LUV

The Key to Amazon.com, Inc. Stock is Company Culture

Amazon.com Inc. (NASDAQ:AMZN) doesn’t even have to release its earnings to make the news. The scope of Amazon is now so broad and so deep that even a minor stirring in the water is enough to generate company news.

On Wednesday, company CEO Jeff Bezos released his annual shareholder letter. It’s actually a short, yet critically important, read. It describes some fundamental essentials about Amazon’s corporate culture which is one of the reasons why the companies become so successful. Whether you are an AMZN stock owner, or are considering becoming one, there are few things from the letter that I think deserve to be highlighted.

The Letter

Bezos attributes the AMZN stock success to having high standards, but he asks an important question as to whether high standards are “intrinsic or teachable.” He believes the latter, and I heartily agree. Motivated individuals, and even unmotivated individuals, will often rise to a higher call. I myself had a high school teacher who demanded the very best, and lifted many failing math students and made them into B students are better.

We often hear the term “step up” in reference to second-string professional athletes. I’ve certainly seen many creative artists constantly improve the quality of their content because they strive to make it better. There is simply no denying that Amazon has set very high standards within the company, and it is obvious in every way when you interface with the company as a consumer.

Bezos points out that “unrealistic beliefs on scope kill high standards.” This comes down to internal corporate communications. As a communications professional, I can’t tell you the importance of properly communicating what a path to success looks like. Hard work isn’t enough. You must communicate the company vision and establish realistic and attainable goals, often achieved in steps, for your employees. Clearly, Amazon has this down.

Bezos talks about some other concepts, but he points out some of the milestones that Amazon has achieved recently, which I believe are directly attributable to these elements of company culture.

Company Culture Leads to Company Achievements

Amazon Prime now has over 100 million paying members. This is simply extraordinary. That’s more members than even Costco Corporation (NASDAQ:COST) has. At $99 a pop (the typical cost of a membership), that means Amazon is generating $10 billion a year without even lifting a finger.

Amazon Web Services is generating a run rate of $20 billion annually. Active users increased by 250% last year alone.

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I was frankly amazed to discover that more than half of the units sold on Amazon worldwide are now from third-party sellers. 300,000 domestic small- and medium-size businesses began selling on Amazon last year. 40 million items were purchased from them on Prime Day alone.

Alexa now has 30,000 skills from outside developers, and controls more than 4,000 home devices. Amazon Echo, the Fire Stick, Prime Video and Music Services continue to grow robustly.

Anecdotal reports are that the Whole Foods Market integration has not been going terribly well. I can say that, from my own experience, the stores in my area have been reorganized, revamped, are much more brightly lit and feel stocked with more product than before.

Meanwhile, even as reports dribble in that working conditions at Amazon aren’t terribly great, Amazon now employs some 560,000 people.

Bottom Line on AMZN Stock

What does this mean as far as AMZN stock is concerned? Behind every great company is a great company culture. Amazon seems to have always had a vision under its CEO. At the mid and upper levels, it appears that this vision is being properly communicated to employees.

All of this bodes well for the company’s future. If Amazon can extend this team culture down to the lowest level employee, much as Southwest Airlines (NYSE:LUV) has done, it could only be a good thing for the stock going forward.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at [email protected]

JetBlue Is Ready For Takeoff

I recently started adding airline stocks to my portfolio. So far I only own the French/Dutch Air France – KLM (OTCPK:AFLYY) airline in my European stock portfolio but I am eager to add stocks in this interesting industry. That’s why I am going to discuss a stock I recently put on my watchlist in this article: JetBlue (JBLU)



Source: Wikipedia Commons

Macro Says Yes

In a recent article, I discussed the outlook of the US economy. One of the things that stood out was the strong performance of shipments which indicates strong sentiment among transportation companies. These tend to be a very good leading indicator of transportation stocks in general.


Shipments sentiment is currently at levels not seen since 2005 while the official ISM manufacturing index is hovering at its highest levels since the GFC recovery.


The fact that the year-on-year returns of transportation stocks seem to lag compared to the strong sentiment of shipments is the result of a mature stage in the business cycle. It is highly unlikely that transportation stocks are going to be up over 50% on average as the indicator would indicate at this point. However, this does not mean that the indicator is broken. The average transportation stock is set to gain further ground in the early months of 2018. This means that the average transportation stock is an interesting portfolio holding as I discussed in recent articles like this one about Norfolk Southern (NYSE:NSC).

RPKs Seem To Agree

The International Air Transport Association seems to agree with my bull case. Mainly because they compare the leading global composite PMI to real revenue paying kilometers which is a perfect coincident indicator to track air traffic output.


That being said we see that RPKs are growing close to 8% which is a value that is common during times of above-average economic acceleration. We are seeing it now and we saw it in 2013 and after the GFC.

Given that JetBlue is a regional player instead of a global airline it is important to dig a bit deeper. What we see in the graph below is that North America is heavily being outperformed by every single region. This of course is not the most bullish thing on earth but it is also not a warning sign. The US has by far the most mature market and emerging markets in particular tend to outperform the US in times of strong economic growth.


The US market can be seen below. It has by far the biggest market share and is even bigger than China and Europe while growth rates are only outperforming the domestic markets in Brazil and Australia.

Hurricane Irma Is Still Doing Damage To Traffic Numbers

JetBlue is one of the regional airlines that was hit hard by Irma during the hurricane season. The airline is very active in the Florida and Caribbean region, so more than 2,500 of its flights were canceled and operating income came in $30 million lower in the third quarter. Fourth quarter operating income is expected to be $50-$70 million lower due to ongoing problems in these regions.


Source: JetBlue

That’s also the main reason why JetBlue is seeing a rather severe revenue passenger decline. Revenue passenger growth on a three month basis is dangerously close to 0% following the plummet of its numbers during hurricane season.


Source: Author’s Spreadsheets (Raw Data: JetBlue)

These numbers are much lower than Southwest’s (NYSE:LUV) 6.5% growth in November and Alaska Air’s (NYSE:ALK) 5.4% increase in October.

I believe that we are going to see much higher growth rates in 2018 when business goes back to normal.

A Business Model In Mint Condition

JetBlue is currently expanding a new service that is making a big difference in the airline business. The so called ‘mint service’ focuses on enhanced customer comfort in every stage of the flight from an easy check-in to early boarding, comfortable seats and free Wi-Fi to having the first bag at the carousel.


Source: JetBlue

This service is only available on coast-to-coast flights from major airports and has already shown 60% Y/Y growth in the third quarter of this year. Additionally the airline is expanding on the service in Boston which should see more than 200 take-offs a day over the next few years. Fort Lauderdale will see up to 140 departures per day over the same time period.

Chart
JBLU data by YCharts

This is likely going to continue JetBlue’s growing revenue trend which did not even get a major hit during the GFC. It seems that $2 billion in sales is likely in 2018. That is going to push earnings much higher under the current cost cutting program which contains cutting ties with expensive online travel agencies and will save the company up to $300 million until 2020.

Earnings Growth Will Continue

In 2018, analysts expect earnings to surge about 7.5% to $1.89 per share. This would be a big relief after a year that saw the highest flight delay rate since 2007 due to hurricanes.

All earnings revisions were made on the upside with 5 revisions for the fourth quarter of 2017, one for the first quarter of 2018 and two for the fourth quarter of 2018.


Source: Nasdaq

The interesting thing is that analysts were done downgrading 2018 earnings in the fourth quarter of 2017 when analysts started to upgrade their highest eps predictions to $2.35 per share.


Source: 4-Traders

This puts JetBlue’s valuation at roughly 11 times next year’s earnings which is fairly cheap given its potential going into 2018.

Takeaways & One Last Graph

JetBlue is desperately trying to break out of a downtrend that started in 2015. 2016 already saw a strong uptrend which was abruptly ended during 2017’s hurricane season. At this point we are once again back at a make-or-break point.


I do not know if we are going to break out immediately. What I do know, or at least expect after doing my homework, is that we will see a breakout in the first quarter of 2018. The company is in a very favorable business environment that will improve the company’s profitability despite higher input prices like the price of crude oil. Revenue passenger numbers are set to increase again and the expansion of its successful Mint program will further enhance customer value and margins on coast-to-coast flights.

I think this stock is set to be a very strong performer in the first months of 2018 and I am likely to add this one to my existing airline play.

On a side note: please let me know your experiences with this company and its Mint program. It would be nice to see a few real-life experiences besides analyst expectations.

Stay tuned!

Thank you for reading my article. Please let me know what you think of my thesis. Your input is highly appreciated!

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in JBLU over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article serves the sole purpose of adding value to the research process. Always take care of your own risk management and asset allocation.

About this article:ExpandAuthor payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.Tagged: Investing Ideas, Long Ideas, Services, Regional AirlinesWant to share your opinion on this article? Add a comment.Disagree with this article? Submit your own.To report a factual error in this article, click here

Spirit’s November Traffic Fueled By Busy Thanksgiving Holiday Travel

Spirit Airlines’ (SAVE) growth continues to outpace competing airlines and with a 7% PE ratio discount compared to the industry average, the company has room to grow from a revenue and stock appreciation standpoint. This was evident again when the company, along with the other major airlines, recently reported November 2017 traffic results. While most major airlines experienced respectable growth due to busy Thanksgiving holiday travel, its very important to see Spirit continuing to post consistent growth with previous months. Spirit surpassed November 2016 growth of 15.5% and 16.4% for revenue passenger miles (RPMs) and available seat miles (ASMs) year over year.

Holiday traffic is more important as travelers value reliability when it comes to the holidays and this is an area Spirit has struggled in the past. I will discuss this is more detail, but November 2017 traffic data come in as follows:

Revenue passenger miles (RPMs) measures the traffic for an airline and is calculated by multiplying the number of revenue-paying passengers for the month by the total distance of flights for the month. Spirit Airlines RPMs increased 17.3% year over year to over 2.08 billion. Spirit wasnt the only airline to see increased traffic during November. In comparison to other airlines, United (NYSE:UAL) by far led the way with a 5.1% increase. Behind Uniteds stellar month was Delta Air Lines (NYSE:DAL) at 3.5% increase, Southwest (NYSE:LUV) with increases of 3.4%, and JetBlue (NASDAQ:JBLU) right behind with an increase of 3%.

Average seat miles (ASMs) measures the airlines’ flight carrying capacity and is calculated by multiplying the number of seats available for passengers during the month by the total distance of flights for the month. Spirit Airlines’ ASMs increased 17.1% year over year to over 2.55 billion. This was a much greater increase compared to other airlines with Uniteds 5.1% increase being the next largest jump at over 3 times less. JetBlue and Delta followed behind with increases of 4.3% and 2.9%, respectively. Lastly, Southwest fell well behind competitors with an increase of only 2.5%.

Based on these results for the month of November 2017, Spirit Airlines continues to show impressive growth in comparison to the other airlines. It shows that their unique and market disrupting business model is still effective with RPMs and ADMs metrics both in the high teens and well above competitors. The 17.3% gain in RPMs was more than 3 times the next largest growth posted in the industry by United. With RPMs and ASMs of only 2.08 billion and 2.55 billion, both of which are significantly below the other major airlines, there is a lot of growth to be achieved by the low-cost airline.

While Spirit has seen extraordinary growth throughout much of the year, its encouraging to see such strong traffic in November. AAA was projecting a 3.3% year-over-year increase of Americans traveling 50 or more miles over Thanksgiving to a total of nearly 51 million individuals. These projections ranked as the busiest Thanksgiving travel since 2005. Within that, there are certain economic trends that skew that travel toward airlines. Airlines received the largest growth of Thanksgiving travelers with a 5% increase largely due to the highest Thanksgiving gas prices since 2014. Given Spirits issue with reliability, I was encouraged to see them get such a large percentage of this volume growth. Generally, I would expect travelers to be willing to pay a higher ticket for a higher probability of reaching their destination, but Spirit has put a large effort into fixing this negative image. In early December, the company announced a second straight month of record-breaking on-time success rate with 90.4% of all network flights arriving on-time in the month of November. This has culminated into a 4% system-wide on-time performance improvement through the first 11 months of 2017.

Improving this metric and ultimately the companys public image is a key initiative for Spirit and it becomes all the more important around the holidays. Spirit must keep this going in December and the Christmas holiday when AAA expects a record-breaking 107 million Americans to travel for the holiday. 6.4 million of them will travel by air, which is a 4.1% increase from the prior year. Im encouraged that Spirit will see a large portion of this increase largely due to their ability to increase their on-time success rate and their success in taking advantage of Thanksgiving holiday travel. A strong December will get the company off to a positive start for 2018 where I expect this positive momentum to continue.

While there are certain factors that could impact this trend, a lot of uncertainties are more likely to impact international travel versus domestic travel where Spirit Airlines concentrates. Additionally, the ongoing open contract negotiations with their pilots must be closely monitored. The pilots are represented by the Air Line Pilots Association and the two parties have been in an over 2-year bitter contract negotiation. Data shows that Spirit pays their pilots about half of what the other large airlines are paying their pilots due to their low-cost business model. As was seen earlier in the year, the pilots have the ability to impact flights and cause pain to shareholders–this situation should be closely monitored, but given the federal court order win in May, Im hopeful that the worst is behind Spirit.

In order to take full advantage of this increase in passengers, Spirit must continue to offer cheaper fares while managing customer service issues and the associated bad publicity. With their unique business model, Spirit Airlines is able to offer fares, on average, 40% cheaper than other airlines, according to the Department of Transportation (DOT) in a recent study. Even after adding additional items, such as seat assignments, bags, and refreshments, the total fare is 35% lower according to the same DOT study. Because of the company’s unique business model, the company tends to not spend on investments such as large dollar advertising campaigns, multiple-class cabins, and other technologies such as satellites and wireless internet equipment. Concentrating on operational efficiency allows the company to offer the lowest possible fares while still achieving higher profit margins than any other U.S. airline.

From a financial statement perspective, the company last reported third-quarter 2017 results. The company translated increased traffic into more revenue at a growth rate of 10.6% to $687 million. Despite the revenue growth, costs continued to climb at a slightly higher rate of 20% to $583 million. The increase in costs was attributed to flight volume, passenger re-accommodation expense, and higher fuel rates. The higher re-accommodation expenses were largely due to hurricane season. Again, this is something all airlines are dealing with and it isnt changing customer sentiment. From a valuation standpoint, Spirit Airlines stock looks cheap at a PE ratio of 14.3 compared to an industry average of 15.3 meaning the stock has nearly 7% to grow until it reaches the industry average.

With any rapid growth plan, there are some risks investing in Spirit Airlines; however, I believe the potential reward outweighs the risk. The above-industry average November 2017 and Q3 results compared to the other major airlines shows that their unique business model is continuing to be successful with airline customers even during the busy and time-sensitive holiday travel season. Given this success and low valuation, I believe the company is in a great position to take advantage of the expected increase in airline passengers as a result of the improving US economy and lower fuel prices. I fully expect the rapid growth story to continue through the remainder of 2017 and into 2018.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SAVE over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

About this article:ExpandAuthor payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.Tagged: Investing Ideas, Long Ideas, Services, Air Services, OtherWant to share your opinion on this article? Add a comment.Disagree with this article? Submit your own.To report a factual error in this article, click here

Spirit’s November Traffic Fueled By Busy Thanksgiving Holiday Travel

Spirit Airlines’ (SAVE) growth continues to outpace competing airlines and with a 7% PE ratio discount compared to the industry average, the company has room to grow from a revenue and stock appreciation standpoint. This was evident again when the company, along with the other major airlines, recently reported November 2017 traffic results. While most major airlines experienced respectable growth due to busy Thanksgiving holiday travel, its very important to see Spirit continuing to post consistent growth with previous months. Spirit surpassed November 2016 growth of 15.5% and 16.4% for revenue passenger miles (RPMs) and available seat miles (ASMs) year over year.

Holiday traffic is more important as travelers value reliability when it comes to the holidays and this is an area Spirit has struggled in the past. I will discuss this is more detail, but November 2017 traffic data come in as follows:

Revenue passenger miles (RPMs) measures the traffic for an airline and is calculated by multiplying the number of revenue-paying passengers for the month by the total distance of flights for the month. Spirit Airlines RPMs increased 17.3% year over year to over 2.08 billion. Spirit wasnt the only airline to see increased traffic during November. In comparison to other airlines, United (NYSE:UAL) by far led the way with a 5.1% increase. Behind Uniteds stellar month was Delta Air Lines (NYSE:DAL) at 3.5% increase, Southwest (NYSE:LUV) with increases of 3.4%, and JetBlue (NASDAQ:JBLU) right behind with an increase of 3%.

Average seat miles (ASMs) measures the airlines’ flight carrying capacity and is calculated by multiplying the number of seats available for passengers during the month by the total distance of flights for the month. Spirit Airlines’ ASMs increased 17.1% year over year to over 2.55 billion. This was a much greater increase compared to other airlines with Uniteds 5.1% increase being the next largest jump at over 3 times less. JetBlue and Delta followed behind with increases of 4.3% and 2.9%, respectively. Lastly, Southwest fell well behind competitors with an increase of only 2.5%.

Based on these results for the month of November 2017, Spirit Airlines continues to show impressive growth in comparison to the other airlines. It shows that their unique and market disrupting business model is still effective with RPMs and ADMs metrics both in the high teens and well above competitors. The 17.3% gain in RPMs was more than 3 times the next largest growth posted in the industry by United. With RPMs and ASMs of only 2.08 billion and 2.55 billion, both of which are significantly below the other major airlines, there is a lot of growth to be achieved by the low-cost airline.

While Spirit has seen extraordinary growth throughout much of the year, its encouraging to see such strong traffic in November. AAA was projecting a 3.3% year-over-year increase of Americans traveling 50 or more miles over Thanksgiving to a total of nearly 51 million individuals. These projections ranked as the busiest Thanksgiving travel since 2005. Within that, there are certain economic trends that skew that travel toward airlines. Airlines received the largest growth of Thanksgiving travelers with a 5% increase largely due to the highest Thanksgiving gas prices since 2014. Given Spirits issue with reliability, I was encouraged to see them get such a large percentage of this volume growth. Generally, I would expect travelers to be willing to pay a higher ticket for a higher probability of reaching their destination, but Spirit has put a large effort into fixing this negative image. In early December, the company announced a second straight month of record-breaking on-time success rate with 90.4% of all network flights arriving on-time in the month of November. This has culminated into a 4% system-wide on-time performance improvement through the first 11 months of 2017.

Improving this metric and ultimately the companys public image is a key initiative for Spirit and it becomes all the more important around the holidays. Spirit must keep this going in December and the Christmas holiday when AAA expects a record-breaking 107 million Americans to travel for the holiday. 6.4 million of them will travel by air, which is a 4.1% increase from the prior year. Im encouraged that Spirit will see a large portion of this increase largely due to their ability to increase their on-time success rate and their success in taking advantage of Thanksgiving holiday travel. A strong December will get the company off to a positive start for 2018 where I expect this positive momentum to continue.

While there are certain factors that could impact this trend, a lot of uncertainties are more likely to impact international travel versus domestic travel where Spirit Airlines concentrates. Additionally, the ongoing open contract negotiations with their pilots must be closely monitored. The pilots are represented by the Air Line Pilots Association and the two parties have been in an over 2-year bitter contract negotiation. Data shows that Spirit pays their pilots about half of what the other large airlines are paying their pilots due to their low-cost business model. As was seen earlier in the year, the pilots have the ability to impact flights and cause pain to shareholders–this situation should be closely monitored, but given the federal court order win in May, Im hopeful that the worst is behind Spirit.

In order to take full advantage of this increase in passengers, Spirit must continue to offer cheaper fares while managing customer service issues and the associated bad publicity. With their unique business model, Spirit Airlines is able to offer fares, on average, 40% cheaper than other airlines, according to the Department of Transportation (DOT) in a recent study. Even after adding additional items, such as seat assignments, bags, and refreshments, the total fare is 35% lower according to the same DOT study. Because of the company’s unique business model, the company tends to not spend on investments such as large dollar advertising campaigns, multiple-class cabins, and other technologies such as satellites and wireless internet equipment. Concentrating on operational efficiency allows the company to offer the lowest possible fares while still achieving higher profit margins than any other U.S. airline.

From a financial statement perspective, the company last reported third-quarter 2017 results. The company translated increased traffic into more revenue at a growth rate of 10.6% to $687 million. Despite the revenue growth, costs continued to climb at a slightly higher rate of 20% to $583 million. The increase in costs was attributed to flight volume, passenger re-accommodation expense, and higher fuel rates. The higher re-accommodation expenses were largely due to hurricane season. Again, this is something all airlines are dealing with and it isnt changing customer sentiment. From a valuation standpoint, Spirit Airlines stock looks cheap at a PE ratio of 14.3 compared to an industry average of 15.3 meaning the stock has nearly 7% to grow until it reaches the industry average.

With any rapid growth plan, there are some risks investing in Spirit Airlines; however, I believe the potential reward outweighs the risk. The above-industry average November 2017 and Q3 results compared to the other major airlines shows that their unique business model is continuing to be successful with airline customers even during the busy and time-sensitive holiday travel season. Given this success and low valuation, I believe the company is in a great position to take advantage of the expected increase in airline passengers as a result of the improving US economy and lower fuel prices. I fully expect the rapid growth story to continue through the remainder of 2017 and into 2018.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SAVE over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

About this article:ExpandAuthor payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500.Tagged: Investing Ideas, Long Ideas, Services, Air Services, OtherWant to share your opinion on this article? Add a comment.Disagree with this article? Submit your own.To report a factual error in this article, click here

The Transportation Sector Just Had Its Best Day Of 2017

The Transportation Sector Just Had Its Best Day Of 2017 Related FDX Bill Gates: Tech Titan To Famed Investor Analysis: US Postal Service, Built To Deliver Letters, Struggles To Compete In Package Delivery Need Some Realty Income In Your Portfolio (Seeking Alpha)
Related UPS Analysis: US Postal Service, Built To Deliver Letters, Struggles To Compete In Package Delivery Bank Of America, Coca-Cola, Foot Locker, UPS: 'Fast Money' Picks For November 15 In Depth Analysis Of Berkshire Hathaway Portfolio (Seeking Alpha)

The widely followed Dow Jones Transportation Average Index just had its best day of 2017 and is now up nearly 11 percent year-to-date. There are several signs that this rally is not a one-day wonder. 

Catalysts Ignored

Part of the issue confounding transportation stocks this year is that some components of the Dow Jones Transportation Average Index have not reacted as expected to perceived positive catalysts. For example, with oil prices low, it would have been reasonable to expect more of a boost for airline stocks.

“This sub-par activity for the transportation sector is not for lack of investor enthusiasm. In fact, Airlines have had a fairly headline-heavy year (for better or worse) including high-profile positions undertaken by notorious airline bear Warren Buffett in United Continental Holdings (NYSE: UAL), American Airlines Group Inc. (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV),” said Direxion in a note. “Couple that with continuously low crude oil prices and a presidential administration that campaigned heavily on rebuilding U.S. infrastructure, and transportation stocks should be having a record year.” 

Risk-tolerant traders may want to consider playing a transportation resurgence with the Direxion Daily Transportation Bull 3X Shares (NYSE: TPOR), which debuted earlier this year as the first leveraged transportation ETF. 

The Direxion Daily Transportation Bull 3X Shares is designed to deliver triple the daily returns of the Dow Jones Transportation Average. As is the case with any other leveraged ETF, TPOR is a trade, not an investment, meaning traders should use the fund over intraday time frames, not a buy and hold the product. Airlines account for nearly 19 percent of TPOR's underlying index, making the group the index's third-largest sector weight.

Year-End Potential

TPOR is a leveraged ETF for aggressive traders to consider from now through the end of 2017 because some transportation stocks historically perform well in the fourth quarter.

“The fourth quarter may be the index’s best opportunity to turn around its anemic 2017,” said Direxion. “Over the past five years, the index’s Q4 performance averaged over 7 percent growth and only ended the quarter down once in that span; in 2015. Delivery companies like FedEx Corp. (NYSE: FDX) and United Parcel Service Inc. (NYSE: UPS) typically drive the Index around the end of the year.”

Some railroad and airline stocks also have a penchant for solid fourth-quarter performances. Shipping and railroad stocks combine for over 56 percent of TPOR's roster.

Related Links:

Some Dividend ETFs Could Toss GE. 

It's Not All About Fees With ETFs.