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Buy Airline Stocks Now Because of a Surge in This Old Index, Says Oppenheimer

Oppenheimer analyst Ari Wald said airline stocks are smart picks right now as the Dow Jones Transportation Average surges and airlines break out of a technical resistance, CNBC reported.

Wald's picks are based on the Dow Theory, which holds that transportation stocks rallying signal broader market upside since the trains, planes and automobiles have to be carrying something.

The transportation industry is at a good value with healthy momentum, but earnings will likely contract 4% year-over-year for airlines, according to S&P Global portfolio manager Erin Gibbs.

Wald is most bullish on airline stocks America Airlines (AAL) , Southwest Airlines (LUV) and Delta Air Lines (DAL) . Though all three stocks are down in late trading Tuesday, they're up double digits year-to-date.

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