In this article we will list the 5 Best Railroad Stocks to Buy According to Analysts. Please visit 10 Best Railroad Stocks to Buy According to Analysts if you’d like see an extended list and how we came up with the list of best value stocks.
5. Canadian National Railway Co. (NYSE:CNI)
Stock Upside: 10.75%
Number of Hedge Fund Holders: 34
Canadian National Railway Co. (NYSE:CNI) is one of the best railroad stocks to buy according to analysts. On March 5, Canadian National Railway Co. (NYSE:CNI) reported its best February on record for grain movement. Canadian National Railway, or CN, shipped more than 2.67 million metric tons of grain out of Western Canada during the month. This volume beat the previous February record set in 2021.
According to CN, the blowout February performance builds on another robust month before, when the company reported its second-best January on record for grain movement. The company detailed that the February grain volumes were up 15% year over year.
matthew siddons / Shutterstock.com
Separately, on March 4, CN unveiled two specially painted commemorative locomotives from its Homewood, Illinois, facility as part of its America250 celebrations. This is in anticipation for the upcoming 250th anniversary of US independence later this year on July 4.
The company said the two locomotives will enter active freight service immediately. It added that the locomotives are designed to symbolize the dual pillars of the American story, which are independence and innovation. The locomotives will travel across the company’s US rail network throughout 2026, covering routes from the Gulf Coast through the Midwest and into the Great Lakes region.
Canadian National Railway Co. (NYSE:CNI) is a Canadian freight rail company. It operates a rail network of about 20,000 route miles across Canada and the United States. The company transports commodities such as petroleum, chemicals, grain, forest products, coal, and automotive goods.
4. Union Pacific Corporation (NYSE:UNP)
Stock Upside: 13.49%
Number of Hedge Fund Holders: 99
Union Pacific Corporation (NYSE:UNP) is one of the best railroad stocks to buy according to analysts. On March 19, Evercore ISI upgraded Union Pacific Corporation (NYSE:UNP) to Outperform from In Line and raised its price target slightly to $262 from $260. The firm highlighted Union Pacific’s strong volume growth, robust margins, and noted that the railroad trades at a discount compared to nearly all peers. Analysts expect performance to remain solid, particularly once tough intermodal comparisons are behind it.
Evercore ISI also pointed to the pending merger application, expected in about six weeks, as a potential upside catalyst. If the merger does not proceed, the stock could still deliver low-to-mid teens upside organically. If the merger gains traction toward closing, Union Pacific could be viewed as a premier growth industrial stock, with synergy-driven earnings expansion over the next three to four years.
On March 5, Reuters reported that US railroads, including Union Pacific Corporation (NYSE:UNP), CSX, and BNSF, are moving to recapture freight that shifted to truckers in recent years. The companies believe that shrinking truck capacity and sharply rising road-haul rates have swung the competitive pendulum back toward rail, said Reuters.
The report noted that for several years, an oversupply of trucking capacity kept road rates low. This allowed truckers to undercut rail on price and poach intermodal freight that would otherwise have moved by train. That dynamic is now reversing, noted Reuters.
Reuters stated that the primary catalyst of the reversal is a contraction in trucking supply. For instance, smaller carriers, who make up roughly 90% of all US trucking operators, are exiting the market because they are squeezed out by rising fuel and insurance costs and tightening federal regulations on driver licensing and safety. As a result, national van spot rates climbed to $2.43 per mile in February this year, up 20% from last year, said Reuters.
According to Reuters, the data matters because intermodal freight, which is cargo shipped in containers that can move seamlessly between ships, trucks, and trains, is the direct competitive battleground between the two modes, and rail generally needs to offer roughly a 15% cost advantage to pull freight off highways. So, as trucking rates rise, that threshold is now achievable on more routes and even on shorter hauls. Each major railroad is moving quickly to capitalize, Reuters concluded.
Union Pacific Corporation (NYSE:UNP) is a US freight rail company. It operates over 32,000 route miles across 23 western states, transporting agricultural products, automotive goods, chemicals, coal, industrial products, and intermodal containers.
3. L.B. Foster Company (NASDAQ:FSTR)
Stock Upside: 15.13%
Number of Hedge Fund Holders: 6
L.B. Foster Company (NASDAQ:FSTR) is one of the best railroad stocks to buy according to analysts. On March 3, L.B. Foster Company (NASDAQ:FSTR) announced its fourth‑quarter and full‑year 2025 results in which it reported its highest fourth‑quarter net sales since 2018.
Quarterly net sales were $160.4 million, a 25.1% increase year over year and beating analyst expectations by about 1%. This beat, said management, was driven by stronger sales in the Rail and Infrastructure segments, up 23.7% and 27.3%, respectively.
GAAP earnings per share came in at $0.22, which undershot Wall Street expectations by about 66%. This was mainly due to a higher effective tax rate, the absence of a prior‑year tax valuation‑allowance benefit, and UK pretax losses that were not tax‑effective, noted management.
For the full year 2025, net sales rose 1.7% to $540.0 million, adjusted EBITDA increased 16.4% to $39.1 million, and net income fell to $7.55 million from $42.95 million in FY2024. Management explained that decline was largely because a one‑off tax valuation‑allowance release in the prior year did not recur.
In light of the performance, management gave 2026 guidance of roughly 3.7% sales growth and adjusted EBITDA expansion of 10%-11%. It also anticipates free cash flow to touch $20 million, capital expenditures to rise to about 2.7% of sales, and leverage to stay within a disciplined 1.0x-1.5x range.
L.B. Foster Company (NASDAQ:FSTR) is a US manufacturing and distribution company serving the rail and infrastructure sectors. It provides rail products such as trackwork, rail joints, friction management systems, and rail technologies, along with services for construction and energy markets.
2. GATX Corporation (NYSE:GATX)
Stock Upside: 28.70%
Number of Hedge Fund Holders: 24
GATX Corporation (NYSE:GATX) is one of the best railroad stocks to buy according to analysts. On February 19, GATX Corporation (NYSE:GATX) shared its Q4 and full‑year 2025 earnings, where it reported higher net income and EPS, a dividend increase, and a new $300 million share‑repurchase authorization.
Fourth‑quarter revenue was $449 million, which was well ahead of the $443.7 million consensus forecast. Management said the beat came on the back of higher lease revenue and gains on asset dispositions.
Quarterly diluted EPS reached $2.66 and surpassed Wall Street’s expectations by about 0.8%. This reflects higher segment profit, tax‑adjustment benefits, and the contribution from the Wells Fargo railcar acquisition that closed on January 1, 2026, noted management.
For the full year, revenue totaled $1.74 billion, up about 9.8% year over year. The increase came from growth in rail leasing and engine leasing portfolios, management explained. The EPS was also a blowout, coming in at $9.12, which is a 17% increase year over year. Management said the jump was aided by higher earnings, a $0.37 per‑share positive tax‑adjustment impact, and a $1.3 billion investment volume.
Looking ahead, management expects the FY2026 EPS to fall in the $9.50-$10.10 per diluted share range. Meanwhile, the company’s board raised the quarterly dividend by 8.2% to $0.66 per share. The payout will be distributed on March 31, 2026.
GATX Corporation (NYSE:GATX) is a US railcar leasing company. It owns, leases, and manages a fleet of tank cars, freight cars, and locomotives, serving customers across industries such as chemicals, petroleum, agriculture, and manufacturing.
1. FreightCar America, Inc. (NASDAQ:RAIL)
Stock Upside: 100.00%
Number of Hedge Fund Holders: 18
FreightCar America, Inc. (NASDAQ:RAIL) is one of the best railroad stocks to buy according to analysts. On March 9, FreightCar America, Inc. (NASDAQ:RAIL) announced its Q4 and full‑year 2025 results. Quarterly revenue reached $125.6 million, which means it failed to reach the $160.6 million that analysts expected by a 21.8% margin. Management said during the earnings call that the miss was possible because the quarter’s deliveries included more converted railcars with lower average selling prices compared with the newly manufactured railcars of Q4 FY2024.
EPS for the quarter was $0.16, which also fell short of the $0.17 consensus estimate. For this, management attributed the miss to a higher effective tax rate and the absence of a prior‑year tax‑valuation‑allowance benefit.
The full year revenue totaled $501.0 million, a 10.4% year over year decline. Management said the underperformance reflects fewer railcar deliveries (4,125 vs 4,362) and a shift toward lower‑price conversion builds. But EPS rose to $1.09 compared with a loss of $3.12 in FY2024. This was aided by a $51.9 million release of a deferred‑tax valuation allowance and an improved gross margin, which was 14.6% for FY2025 and 12.0% for FY2024.
For FY2026, the company issued guidance of 4,000-4,500 railcar deliveries, $500-$550 million in revenue, and $41-$50 million of adjusted EBITDA.
FreightCar America, Inc. (NASDAQ:RAIL) is a US railcar manufacturing company. It designs and builds freight railcars such as coal cars, covered hoppers, flat cars, and intermodal equipment, with production facilities in the Midwest.
While we acknowledge the potential of RAIL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RAIL and that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
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 below.
