As you can see, their financial metrics are almost identical. CSX Corporation (NYSE:CSX) operates 21,000 miles of track in 23 states. Norfolk Southern Corp. (NYSE:NSC) has 20,000 miles spread out over 20 states. Both also serve the District of Columbia. Both have had the same performance over the past year, with CSX Corporation (NYSE:CSX) rising almost 24% and Norfolk Southern Corp. (NYSE:NSC) rising 21%.
The west coast rail
The west coast rail to own is Union Pacific Corporation (NYSE:UNP). The other railroad on the west coast is Burlington Northern Santa Fe, which is owned By Warren Buffett’s Berkshire Hathaway. Union Pacific Corporation (NYSE:UNP) is the largest of the publicly-traded railroads with a market cap of almost $73 billion. The company operates over 31,000 miles of track linking the west coast to the gulf coast.
Union Pacific Corporation (NYSE:UNP) has several avenues for growth. For one, it is actively involved in shipping oil from the fast-growing Bakken Shale of North Dakota. Union Pacific sees crude oil shipments by rail rising 40% this year. Five years ago, Union Pacific shipped no oil on its rails. Now, the company ships about 90 million barrels a years. According to CEO Jack Koraleski:
We’ve proved we can move oil two to three times faster than a pipeline, and we’ve proved we can be consistent and reliable. Customers have told me that, if and when they build a pipeline, they’re still going to carve out a piece of their business for rail.
The second avenue for growth is that Union Pacific has plenty of track for goods going in and out of Mexico. Mexico’s manufacturing sector is producing plenty of goods that are shipped to America. There’s no better way to ship than on the railroads and Union Pacific is one of the few that have the track. Union Pacific is able to service all six gateways in Mexico from the U.S. To service the auto industry, Union Pacific typically ships auto parts south to Mexico and returns to the U.S. with automobiles.
Foolish assessment
I really like the rail space. It has high barriers to entry. A company can’t wake up tomorrow and decide to go into the rail business. These five rail stocks have great management, great track location, and are in a prime situation to capitalize on a resurgent economy. If you believes in the long-term future of the U.S., there’s no better sector to be in than the rail space.
The article Continue to Bet on Rail Stocks originally appeared on Fool.com and is written by Mark Yagalla.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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