In this article, we will take a look at 10 Best Railroad Stocks To Buy According To Billionaires.
The trade war initiated by President Trump will force freight railroads to position themselves for the chain reaction. Tariffs on Mexico, Canada, China, and Europe will set in and shake up the trade network. In 2024 alone, American railroads moved $203.1 billion worth of goods across the Canadian and Mexican borders. The rail sector remains a vital economic engine, generating $233.4 billion in output and supporting approximately 750,000 jobs in 2023. At the same time, railroads also demonstrated their commitment to long-term growth by reinvesting $26.8 billion into infrastructure last year.
While much of the attention has been on autos and consumer goods, chemicals are a critical piece of the puzzle. The United States exported over $28 billion in chemicals to Canada last year and imported around $25 billion, making Canada the top supplier of chemical imports. Canada also plays a strategic role in the US critical minerals supply chains, EV battery production, and energy imports, including crude oil, natural gas, and electricity. Industry experts warn that new tariffs could drive up costs across sectors, from chemicals used in drinking water treatment to construction materials like lumber, creating potential inflationary pressure.
Despite the risks, Wall Street remains cautiously optimistic. Analysts believe the supply chain could adapt, especially for goods like lumber that already face steep tariffs. Early signs suggest the administration is moving deliberately, giving companies time to adjust strategies. Railroads and freight remain central players, particularly with Mexico’s auto exports, 70% of which move by rail, and chemicals are heavily reliant on cross-border logistics. Longer term, a trade war could test the strength of USMCA relationships and ripple across North American supply chains, but for now, businesses are preparing while the administration signals a phased approach.
In November 2024, Joe Hinrichs, CEO of a leading US rail company, shared an insight with CNBC’s Jim Cramer that still holds true today:
“From our standpoint, actually, as long as it’s coming to the U.S., we’re going to move it somewhere. If tariffs change the trade portfolio — as long as the economy’s growing, we’ll be a part of it.”
Warren Buffett is a major investor in the railroad industry and has commented that the railroad industry, including BNSF, is a “better business now” than it was in the past. With that outlook in mind, let’s take a look at some of the best railroad stocks that billionaires are piling into.
Our Methodology
For this article, we focused on making a list of all railroad and railcar stocks publicly listed in the United States. Using Insider Monkey’s Q4 2024 database, we examined billionaire sentiment for each stock and selected the 10 most popular ones. The stocks are ranked in ascending order based on the number of billionaire investors as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. L.B. Foster Company (NASDAQ:FSTR)
Number of Billionaire Investors: 4
Stake Value of Billionaire Holdings: $36,454,396
L.B. Foster Company (NASDAQ:FSTR), founded in 1902 and based in Pittsburgh, Pennsylvania, offers engineered products and services for infrastructure in the United States, Canada, the United Kingdom, and internationally. The company provides rail products, monitoring systems, and aftermarket services, in addition to producing precast concrete products for parks, sound walls, bridge components, and custom concrete items. FSTR is one of the best railroad stocks to invest in.
In 2024, L.B. Foster Company (NASDAQ:FSTR) experienced strong cash flow and improved profitability, particularly in its Rail segment, which saw a 14.2% growth in sales and a 300 basis point increase in margins. However, the Infrastructure Solutions segment struggled, with sales dropping 25.2% due to lower pipeline coating volumes. Due to cost-saving measures, including a restructuring program, operating expenses were cut down, and FSTR was able to reduce debt and buy back shares, repurchasing about 300,000 shares in total. For 2025, the company has authorized a new $40 million share repurchase program.
According to Insider Monkey’s fourth quarter database, 4 billionaires were bullish on L.B. Foster Company (NASDAQ:FSTR). Billionaire Mario Gabelli’s GAMCO Investors was the leading stakeholder of the company, with 934,200 shares worth over $25 million.
9. GATX Corporation (NYSE:GATX)
Number of Billionaire Investors: 6
Stake Value of Billionaire Holdings: $221,505,093
GATX Corporation (NYSE:GATX) operates as a leading railcar leasing firm with a diverse fleet of railcars, locomotives, aircraft spare engines, and tank containers. The company operates across three key segments – Rail North America, Rail International, and Engine Leasing. GATX provides leasing services to industries such as petroleum, chemicals, food, and transportation. It ranks 9th on our list of the best railroad stocks to buy.
On April 23, the company reported financial results for the first quarter of 2025. GATX Corporation (NYSE:GATX) reported a net income of $78.6 million, up from $74.3 million in the same quarter last year. Fleet demand stayed strong across the board. In North America, railcar utilization hit an impressive 99.2%, and lease renewals held steady with an 85.1% success rate. The company also made over $30 million from selling railcars in the secondary market. Despite uncertainty in the broader economy, leadership remains optimistic, maintaining a full-year earnings forecast of $8.30 to $8.70 per share
GATX Corporation (NYSE:GATX) declared a $0.61 per share quarterly dividend on April 25. The dividend is payable on June 30, to shareholders on record as of June 13. The company has consistently paid dividends since 1919.
According to Insider Monkey’s Q4 2024 database, 6 billionaires held stakes in GATX Corporation (NYSE:GATX). Billionaire Israel Englander’s Millennium Management was a prominent position holder in the company, with 37,442 shares worth $5.80 million.
8. Trinity Industries, Inc. (NYSE:TRN)
Number of Billionaire Investors: 8
Stake Value of Billionaire Holdings: $65,860,700
Trinity Industries, Inc. (NYSE:TRN) is a major player in the North American rail industry. The company is involved in leasing, servicing, and manufacturing railcars. Its leasing segment not only rents out freight and tank railcars but also provides maintenance, fleet management, and logistics support. Trinity managed a fleet of around 110,000 railcars serving agriculture, energy, chemicals, and consumer goods sectors. It is one of the best railroad stocks to consider.
On March 31, Trinity Industries, Inc. (NYSE:TRN) announced a quarterly cash dividend of $0.30 per share. The dividend will be paid on April 30, to shareholders on record as of April 15. This is the company’s 244th consecutive dividend payment.
Trinity Industries, Inc. (NYSE:TRN) reported adjusted earnings per share of $1.82 for 2024, a 32% increase from last year. This growth was fueled by higher lease rates, stronger margins, and increased external repair activity. The company’s adjusted return on equity reached 14.6%, right within its target range. Cash flow from operations also saw a big boost, rising 65% to $645 million. TRN’s Railcar Leasing and Services Group posted a 10% revenue increase for the year, successfully repricing over half the fleet at better rates while keeping utilization high. Meanwhile, the Rail Products Group improved profits by 68%, due to smoother operations and labor efficiencies, even though revenue stayed flat.
According to Insider Monkey’s Q4 database, Trinity Industries, Inc. (NYSE:TRN) was part of 8 billionaire portfolios. Billionaire Ken Fisher’s Fisher Asset Management was one of the top shareholders of the company, with 253,871 shares worth $8.91 million.
7. The Greenbrier Companies, Inc. (NYSE:GBX)
Number of Billionaire Investors: 11
Stake Value of Billionaire Holdings: $86,312,886
The Greenbrier Companies, Inc. (NYSE:GBX) is a railcar manufacturer and service provider operating in North America, Europe, and South America. It has three business segments – Manufacturing, Maintenance Services, and Leasing & Management Services. GBX produces freight railcars, offers railcar repairs and parts, and manages a fleet of around 15,000 leased railcars. It ranks 7th on our list of the best railroad stocks to invest in.
On April 3, The Greenbrier Companies, Inc. (NYSE:GBX) announced a dividend of $0.32 per share, a 7% increase from its last dividend of $0.30. This marks GBX’s 44th consecutive quarterly dividend. The dividend will be paid on May 13, to shareholders listed by April 22.
For the second quarter of fiscal 2025, The Greenbrier Companies, Inc. (NYSE:GBX) reported net earnings of $52 million on $762 million in revenue. This includes a $6 million charge due to the closure of a European manufacturing facility, which impacted earnings but did not affect the overall strong performance. The company also performed well in its leasing business, with a fleet utilization rate of 98% and a gross margin of 18%, which is consistent with the company’s target range. During the quarter, Greenbrier secured 3,100 new orders worth nearly $400 million, bringing its railcar backlog to 20,400 units valued at about $2.6 billion.
According to Insider Monkey’s data, 11 billionaire investors were bullish on The Greenbrier Companies, Inc. (NYSE:GBX) in Q4 2024.
6. Canadian National Railway Company (NYSE:CNI)
Number of Billionaire Investors: 12
Stake Value of Billionaire Holdings: $9,047,607,042
Canadian National Railway Company (NYSE:CNI) is a transportation company operating in the US and Canada, offering rail transport, intermodal solutions, trucking, and logistics. CNI’s offerings include custom brokerage, specialized cargo handling, temperature-controlled shipments, and oversized load services. It is one of the best railroad stocks to buy, with 12 billionaire investors backing the company.
On January 31, JPMorgan analyst Brian Ossenbeck maintained an Overweight rating on Canadian National Railway Company (NYSE:CNI), but trimmed the price target from C$179 to C$174. CNI faced labor and weather challenges in 2024, missing Q4 expectations. Despite this, JPMorgan remains optimistic for 2025, citing easier comps and supportive tailwinds. The company is still seen as a strong player with less downside risk than peers.
Canadian National Railway Company (NYSE:CNI) on January 30 raised its quarterly dividend by 5% for 2025, marking the 29th straight year of increases. CNI paid a C$0.8875 per share dividend on March 31. The company also announced a new buyback plan, allowing it to repurchase up to 20 million shares between February 4, 2025, and February 3, 2026.
5. Norfolk Southern Corporation (NYSE:NSC)
Number of Billionaire Investors: 13
Stake Value of Billionaire Holdings: $503,643,336
Norfolk Southern Corporation (NYSE:NSC) is an American railroad company that provides freight services for a wide range of goods, including agricultural products, chemicals, construction materials, metals, coal, and automotive parts. On February 24, Benchmark maintained a Buy rating on NSC and a $265 price target. The analysts noted that the company reaffirmed its full-year outlook, expecting 3% revenue growth and improved operating ratios. They have also made progress in controlling costs, with $55 million in productivity gains so far.
Norfolk Southern Corporation (NYSE:NSC) reported strong Q1 2025 results with revenue of $3 billion and earnings per share of $3.31. After adjusting for the Eastern Ohio incident, operating income came in at $961 million, the operating ratio was 67.9%, and EPS was $2.69, reflecting an 8% increase from last year. On April 22, the company announced a quarterly dividend of $1.35 per share, which will be paid on May 20, to shareholders on record by May 2. This marks 171 consecutive quarters of dividend payments since the company’s inception in 1982.
According to Insider Monkey’s Q4 data, Norfolk Southern Corporation (NYSE:NSC) was part of 13 billionaire portfolios. Billionaire Ken Fisher holds a $228.65 million stake in the company.
4. Westinghouse Air Brake Technologies Corporation (NYSE:WAB)
Number of Billionaire Investors: 13
Stake Value of Billionaire Holdings: $890,051,120
Westinghouse Air Brake Technologies Corporation (NYSE:WAB) offers technology and services for the rail and transit industries worldwide. WAB offers a variety of products, including locomotives powered by diesel-electric or LNG, braking systems, and railway electronics. The company also supplies equipment for freight cars, HVAC systems, and industrial IoT solutions. It ranks 4th on our list of the best railroad stocks.
On April 10, JPMorgan started coverage of Westinghouse Air Brake Technologies Corporation (NYSE:WAB) with a Neutral rating and a price target of $175. According to JPMorgan, WAB is valued at 20 times its expected earnings, matching the market average. The company excels in freight locomotives, railcar tech, and aftermarket services, with 60% of its revenue from services. However, analysts are cautious due to potential economic challenges like a US recession and inflation from tariffs.
WAB reported Q1 2025 results that exceeded expectations. The company reported GAAP earnings per share of $1.88 for the first quarter, up 22.9% from last year, and adjusted EPS of $2.28, marking a 20.6% increase. Sales came in at $2.61 billion, with cash from operations clocking in at $191 million. Both the Freight and Transit segments saw growth, contributing to a 4.5% overall sales increase. Wabtec ended the quarter with $698 million in cash and $4.01 billion in debt, maintaining strong liquidity. The company also returned $43 million to shareholders through dividends and repurchased $98 million in shares.
According to Insider Monkey’s Q4 data, Westinghouse Air Brake Technologies Corporation (NYSE:WAB) was found in 13 billionaire portfolios. Billionaire Tom Steyer’s hedge fund held a $271 million stake in WAB.
3. CSX Corporation (NASDAQ:CSX)
Number of Billionaire Investors: 13
Stake Value of Billionaire Holdings: $1,489,665,848
CSX Corporation (NASDAQ:CSX) is one of the best railroad stocks to invest in, with 13 billionaires collectively holding shares worth close to $1.5 billion. The company is based in Jacksonville, Florida, and it offers freight transportation across the United States and Canada through rail and trucking. It transports chemicals, agricultural goods, minerals, automotive products, forest products, fertilizers, metals, coal, and iron ore.
On April 17, UBS analyst Thomas Wadewitz reiterated a Buy rating on CSX Corporation (NASDAQ:CSX) but trimmed the price target from $36 to $34. The analyst praised CSX’s strength in agriculture, fertilizers, and minerals, and noted coal could get a short-term boost from plant restocking. Still, he warned about risks in intermodal, automotive, and chemicals because of economic uncertainty and tariffs.
CSX Corporation (NASDAQ:CSX) posted weaker results for the first quarter of 2025, with operating income falling to $1.04 billion and net income dropping to $646 million. Revenue also slid 7% to $3.42 billion, impacted by lower coal shipments, fuel surcharges, and merchandise volumes.
According to Insider Monkey’s fourth quarter database, CSX Corporation (NASDAQ:CSX) was part of 13 billionaire portfolios. Billionaire Andreas Halvorsen’s Viking Global raised its stake in CSX by 57% in Q4, holding 14.6 million shares worth $473.4 million at the end of Q4 2024.
2. Union Pacific Corporation (NYSE:UNP)
Number of Billionaire Investors: 14
Stake Value of Billionaire Holdings: $2,170,498,974
Headquartered in Omaha, Nebraska, Union Pacific Corporation (NYSE:UNP) provides transportation services across the US for products like grain, fertilizers, coal, food, chemicals, and automobiles, as well as intermodal containers. On April 16, Redburn upgraded UNP from Neutral to Buy, setting a price target of $259. Union Pacific has improved service, trimmed its workforce, and raised cargo volumes, achieving a 55.6% profit margin and a $131.9 billion market cap. Redburn analysts expect a strong Q1 2025 performance.
For the first quarter of 2025, Union Pacific’s net income came in at $1.6 billion, and operating revenue was $6 billion, driven by a 7% increase in volume and solid pricing gains. Freight revenue was up 1%, and excluding fuel surcharges, it grew by 4%. The company saw improvements in several operational metrics, including a 6% increase in freight car velocity and a 9% rise in workforce productivity. This year, UNP aims for share repurchases between $4 billion and $4.5 billion.
According to Insider Monkey’s fourth quarter database, 14 billionaires held collective stakes worth over $2 billion in Union Pacific Corporation (NYSE:UNP). It is one of the best railroad stocks to buy according to billionaires.
1. Canadian Pacific Kansas City Limited (NYSE:CP)
Number of Billionaire Investors: 15
Stake Value of Billionaire Holdings: $6,022,849,580
Canadian Pacific Kansas City Limited (NYSE:CP) operates a freight railway network across Canada, the United States, and Mexico. It transports a wide range of goods, from bulk commodities like grain and coal to consumer products and automotive goods. CP ranks first on our list of the best railroad stocks to buy.
On April 3, BMO Capital Markets maintained an Outperform rating on the stock with a price target of C$128. CP has shown strong financial performance with solid margins and revenue growth. The company also got a boost from the US, and despite economic uncertainty, BMO Capital remains confident in the company’s growth potential and long-term stability.
Canadian Pacific Kansas City Limited (NYSE:CP) raised $1.2 billion through two bond offerings, $600 million in 4.800% notes due 2030 and another $600 million in 5.200% notes due 2035. The deal closed on March 17, 2025, after meeting all customary conditions. CP used the proceeds to refinance existing debt and for general corporate purposes, with any remaining funds temporarily placed in short-term investments or bank deposits.
According to Insider Monkey’s Q4 database, 15 billionaire investors were bullish on Canadian Pacific Kansas City Limited (NYSE:CP), with combined stakes worth $6 billion. Billionaire Chris Hohn’s TCI Fund Management was the leading stakeholder of the company, with a position worth nearly $4 billion.
Overall, CP ranks first among the 10 Best Railroad Stocks To Buy According To Billionaires. While we acknowledge the potential of best railroad stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CP but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
