Oil prices are soaring, knocking down transportation stocks today. UPS (NYSE: UPS) shares dropped 4.9% as of 12:05 p.m. ET, potentially giving investors an opportunity. This comes just days after one Wall Street firm raised its price target on UPS, citing its valuable, capital-intensive infrastructure.
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Last week, Jefferies highlighted UPS as a key HALO trade. That term, reportedly coined by financial advisor Josh Brown, stands for “heavy asset, low obsolescence.” It’s meant to represent the market rotation out of sectors disrupted by artificial intelligence (AI), including software makers. Jefferies also raised its price target from $130 to $135 per share, according to reports. The new price target would represent 38% upside for UPS stock.
Yet the significant tangible assets, physical infrastructure, and lasting economic importance of companies like UPS are now in focus for another reason. The sharp surge in oil prices resulting from the war with Iran is hitting transportation stocks hard today.
Oil spiked well above $100 per barrel this morning. It has since pared some of those gains, but plenty of uncertainty remains about oil production and the effects of the Middle East conflict. Investors are considering just how high oil prices can go.
Long-term investors, though, might view today’s drop in UPS stock as an opportunity. Oil prices rise and fall, and the latest shock should be temporary. UPS predicts revenue will return to growth in 2026 after declining nearly 3% in 2025. Today’s 5% drop could soon be a distant memory if investors jump back into the stocks of industrial companies like UPS.
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