In this article, we discuss 10 Best Railroad Stocks To Buy Now. 

In February, the Association of American Railroads reported that intermodal volumes remained robust, rising 6.4% year-over-year. Weekly originations hit an all-time high in February, averaging 276,654 units. This growth was fueled by steady consumer spending and some importers ordering extra shipments ahead of possible tariffs. So far in 2025, intermodal volume is up 8.5%, and container volume has jumped 9.5%, setting a new record for this period. Moving forward, intermodal growth will depend on consumer demand, which is closely tied to job market strength and potential trade policy shifts.

However, American railroads experienced a 4.5% drop in carloads, moving 843,618 units in February. In the last five months, January had the first increase in carloads, but harsh winter weather, including flooding in the Northeast and freezing temperatures across most of the country, interrupted operations and obstructed freight handling. Without these weather challenges, rail volumes likely would have been higher. Coal being the largest commodity moved by rail continued its downward trend, with carloads dropping 8.2% in February and marking the 14th consecutive month of declines.

As the US ramps up its trade war under President Trump, freight railroads are preparing for the fallout. New tariffs on Mexico, Canada, China, and the EU are set to take effect soon, potentially disrupting a massive trade network. In 2024, American railroads handled $203.1 billion in cross-border trade with Canada and Mexico, being almost evenly split between the two, as reported by CNBC. The rail industry is a huge economic driver, generating $233.4 billion in output and supporting around 750,000 jobs in 2023. Texas is a major hub for freight rail employment since it handles most of the US to Mexico rail traffic. Railroads also reinvested $26.8 billion in infrastructure last year, mostly through private funding. As trade tensions rise, the industry remains focused on keeping goods moving and ensuring rail infrastructure stays strong. Let’s take a look at the best railroad stocks to invest in with the current economic backdrop.

Our Methodology 

For this article, we focused on making a list of all railroad and railcar stocks that are publicly listed in the United States. Using Insider Monkey’s Q4 2024 hedge fund database, we examined the hedge fund sentiment for each stock and selected 10 most popular ones. The stocks are ranked in ascending order based on the number of hedge fund holders 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 Hedge Fund Holders: 7

L.B. Foster Company (NASDAQ:FSTR) is a Pennsylvania-based provider of engineered products and services for building and infrastructure projects globally. It operates in two segments – Rail, Technologies, and Services- offering rail products and monitoring systems, Infrastructure Solutions, manufacturing precast concrete products, and providing steel bridge products and corrosion protection solutions.

L.B. Foster Company (NASDAQ:FSTR)’s fourth quarter revenue climbed 14.2% to $79.2 million, driven by strong sales in rail products, friction management, and track monitoring. Rail margins improved to 22.2%, supported by higher volumes and a recovering UK market. However, rail orders fell 8.5%, and backlog declined 26%, largely due to a strategic pullback in rail products and UK investments. On the bright side, the global friction management backlog surged 53.4%, offsetting some of the decrease. Moreover, strong cash flow allowed debt reduction for FSTR and stronger financial leverage. The Union Pacific settlement will also add $8 million per year in cash flow for the company. On March 3, 2025, L.B. Foster Company (NASDAQ:FSTR) announced a new $40 million share repurchase program that will run until February 2028.

Insider Monkey’s Q4 2024 database found L.B. Foster Company (NASDAQ:FSTR) stock in 7 hedge fund portfolios, the same as the prior quarter. Mario Gabelli’s GAMCO Investors is the leading stakeholder of the company, with 934,200 shares worth over $25 million.

9. GATX Corporation (NYSE:GATX)

Number of Hedge Fund Holders: 14

Ranking 9th on our list of the best railroad stocks is GATX Corporation (NYSE:GATX), a railcar leasing company with operations in the United States, Canada, Mexico, Europe, and India. The company leases tank and freight railcars, locomotives, and aircraft spare engines, serving industries like petroleum, chemicals, food, and transportation. On January 31, the company declared a quarterly dividend of $0.61 per share, which will be distributed on March 31, to shareholders on record as of February 28. This marks a 5.2% increase from the previous year and extends GATX’s uninterrupted history of dividend payments dating back to 1919.

GATX Corporation (NYSE:GATX) reported a Q4 2024 net income of $76.5 million, up from $66.0 million in the same quarter last year. Full-year net income reached $284.2 million, or $7.78 per share, an increase from $259.2 million or $7.12 per share in the previous year. GATX Rail Europe grew its fleet beyond 30,000 wagons, while GATX Rail India surpassed 10,000, with high fleet utilization and rising lease renewal rates. For 2025, the company anticipates steady railcar leasing in North America, increased lease revenue, and growing international railcar demand. GATX projects earnings of $8.30 – $8.70 per share for 2025, driven by strategic investments.

If we look at Insider Monkey’s database of hedge funds as of the end of Q4 2024, GATX Corporation (NYSE:GATX) was found in the portfolios of 14 funds, compared to 16 in the prior quarter.