In this article, we will discuss the 6 Best Railroad Stocks to Buy Right Now.
Railroad companies have always been at the heart of investment booms for decades. While the industry has consolidated in recent years into a handful of titans, it remains a vital part of the economy, facilitating the movement of goods across the country from mines to ports, agricultural fields, and industrial plants.
The U.S. freight rail network is one of the largest in the world, billed as the safest and most cost-efficient. Valued at approximately $80 billion, it generates over $490 million in annual revenues. The global freight transportation market is expected to grow by 3.8% to reach over $252 billion by 2033.
North America will account for the largest share of the growth, owing to increasing demand for an efficient and sustainable transportation system. Railroad companies move about 1.6 billion tons of freight annually in the U.S., accounting for roughly 40% of long-distance freight volume.
The railroad companies’ competitive edge in the transportation business stems from their ability to transport significantly more cargo than trucks. Additionally, fuel efficiency enables them to perform well even when fuel costs increase.
Nevertheless, railroad companies have had to contend with tariff-induced economic uncertainties and inflationary pressures that have affected the flow of goods. High interest rates have also hurt the supply chain.
While Warren Buffett has reiterated that he is not in the market to buy a railroad company, he has made it clear that they are in discussions to make freight rail more efficient, aiming to generate more value.
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Our Methodology
To come up with our list of the best railroad stocks to buy right now, we used various ETFs (iShares U.S. Transportation ETF, SPDR S&P Transportation ETF, First Trust Nasdaq Transportation ETF) and Finviz to scan for railroad and railcar companies. We then focused on stocks with significant upside potential and that were popular among elite hedge funds. Finally, we ranked the stocks in ascending order based on the number of hedge funds that hold stakes in them, as of Q2 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is straightforward: our research has demonstrated that we can outperform the market by replicating 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).
Best Railroad Stocks to Buy Right Now
6. L.B. Foster Company (NASDAQ:FSTR)
Number of Hedge Fund Holders: 6
Upside Potential as of August 29: 13.81%
L.B. Foster Company (NASDAQ:FSTR) is one of the best railroad stocks to buy right now. On August 28, L.B. Foster successfully delivered its first 320-foot rail train to Lake State Railway (LSRC) in Michigan, marking a major innovation in rail logistics.
Rolled by Steel Dynamics Inc. and transported via a five-car consist developed by BNSF Logistics, the shipment included sixty 320-foot rails—eliminating the need for costly field welding or large-scale Continuous Welded Rail installations. This breakthrough enables manifest freight service, reducing operational costs and enhancing delivery flexibility. LSRC plans to use the longer rails for grade crossings, curve replacements, and bridge projects, especially in corrosive environments where welds often fail.
Chief Engineer Tom Klemm praised the rail’s ability to eliminate field welds and improve durability by relocating joints away from high-stress zones. The 320-foot consist also simplifies distribution in congested areas and enhances efficiency for targeted infrastructure upgrades. L.B. Foster sees this as a transformative solution for modern rail networks.
L.B. Foster Company (NASDAQ:FSTR) provides engineered, manufactured products and services for the global rail and infrastructure markets. It offers track components, such as running rails and insulated joints, along with friction management and monitoring technologies.
5. FreightCar America, Inc. (NASDAQ:RAIL)
Number of Hedge Fund Holders: 14
Upside Potential as of August 29: 92.74%
FreightCar America, Inc. (NASDAQ:RAIL) is one of the best railroad stocks to buy right now. On August 4, the company affirmed that it is advancing its growth strategy by investing in tank car capabilities, which are expected to strengthen its cost position and support long-term value creation.
The remarks come on Freightcar achieving commercial excellence initiatives across the business, supported by strong order intake and healthy customer demand. The company successfully increased utilization across four production lines, delivering improved productivity. It also benefited from a richer product mix from disciplined pricing.
Revenues in the second quarter of 2025 totaled $118.6 million, down from $147.4 million in the same quarter last year. Railcar deliveries dropped to 939 units from 1,159 a year ago. Net income totaled $11.7 million, or $0.34 per share, and adjusted net income totaled $3.8 million, or $0.11 per share. During the quarter, Freightcar received 1,226 new orders valued at $106.9 million.
For the full year, Freightcar expects revenue to increase by 0.6% and range between $530 million and $595 million. Adjusted EBITDA is expected to be between $43 and $49 million, representing 7% year-over-year growth.
FreightCar America, Inc. (NASDAQ:RAIL) designs, manufactures, and supplies a wide range of railroad freight cars, along with railcar parts and components. It also offers railcar repair, rebodying services, and conversions to repurpose existing railcars.
