Transport Stock Could Be a Buy

Union Pacific Corporation (NYSE:UNP) stock pulled back sharply after hitting a record high of $143.05 on Jan. 24, but found a firm foothold at its 100-day moving average, and has since taken a handful of bounces from here. At last check, UNP was up 0.4% to trade at $131.81, and could be headed even higher, if past is precedent. 

Per data from Schaeffer's Senior Quantitative Analyst Rocky White, UNP stock has been one of the best stocks to own on the S&P 500 Index (SPX) in April, looking back 10 years (and excluding stocks with fewer than eight returns). UNP shares have ended April higher 90% of the time, averaging a healthy monthly gain of 6.72%.

A continued round of short covering could also contribute to more gains for UNP. Short interest fell by 26% during the last reporting period, but it would still take nearly four days for the remaining bears to cover, at the average pace of trading.

Plus, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows UNP with a 10-day put/call volume ratio of 1.99, which ranks in the 87th percentile of its annual range. This means puts have been bought to open over calls at a quicker-than-usual clip, and could create tailwinds for the shares should some of the weaker bearish hands jump ship.

There are still plenty of analysts that remain skeptical of the security, too, with half of the brokerages covering UNP rating it tepid "hold." Should UNP stock once again rally in April, it could prompt analysts to upgrade the stock.