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.
4. Canadian Pacific Kansas City Limited (NYSE:CP)
Number of Hedge Fund Holders: 60
Upside Potential as of August 29: 15.46%
Canadian Pacific Kansas City Limited (NYSE:CP) is one of the best railroad stocks to buy right now. On August 20, the company entered into an amendment to an existing credit agreement dated June 25, 2024.
The amendment is poised to extend the maturity date of the 5-year credit facility to June 25, 2030, from June 25, 2029. It also extends the maturity date of the 2-year credit facility to June 25, 2027. The restructuring of the credit facilities was undertaken in partnership with the Bank of Montreal, acting as the administrative agent.
Canadian Pacific Kansas City Limited (NYSE:CP) is the first and only single-line railway network in North America with a combined network of over 20,000 miles of track. It provides integrated freight transportation, logistics, and supply chain solutions, moving bulk commodities, merchandise freight, and intermodal containers across the continent for various sectors, including agriculture, automotive, energy, and chemicals.
3. Westinghouse Air Brake Technologies Corporation (NYSE:WAB)
Number of Hedge Fund Holders: 68
Upside Potential as of August 29: 14.89%
Westinghouse Air Brake Technologies Corporation (NYSE:WAB) is one of the best railroad stocks to buy right now. On August 27, 2025, Wabtec (trade name for Westinghouse Air Brake Technologies Corporation) unveiled the EVO Advantage, a next-generation upgrade to its Evolution Series locomotive engine, marking 20 years of EVO innovation and a decade of Tier 4 compliance.
Powered by breakthrough eTurbo technology, the EVO Advantage delivers up to 7% fuel savings by converting exhaust energy into traction power—an advancement that builds on Wabtec’s legacy of emission-driven engineering and performance. With over 10,000 EVO engines and nearly 1,200 Tier 4 units in operation, the company continues to lead the freight locomotive market.
The EVO Advantage system, currently undergoing field testing, integrates seamlessly into existing Tier 3 and Tier 4 locomotives. It features a compact turbo alternator design, including a carbon fiber sleeve that enables efficient packaging without sacrificing durability. Wabtec’s commitment to innovation has consistently set it apart from competitors, offering solutions that meet regulatory standards while enhancing fuel efficiency and reliability. As Jim Gamble, VP of Engines and Power Solutions, noted, “Our destination lies ahead—and our innovations will ensure we all get there more safely, efficiently, and reliably.”
Westinghouse Air Brake Technologies Corporation (NYSE:WAB) designs, manufactures, and services equipment, systems, and digital solutions for the global rail and transit industries. It provides value-added products and services for freight, transit, mining, and industrial markets, focusing on enhancing the safety, efficiency, and productivity of transportation through technological innovation and digital transformation.
2. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 71
Upside Potential as of August 29: 16.50%
CSX Corporation (NASDAQ:CSX) is one of the best railroad stocks to buy right now. On August 27, TD Cowen cut its price target for CSX Corp. from $45 to $38, while maintaining a Buy rating. The revision comes after signals that Berkshire Hathaway is unlikely to pursue an acquisition of CSX, contrary to earlier expectations of a strategic East-West rail merger.
TD Cowen cited a lackluster merger appeal for Berkshire and now sees a potential CSX acquisition by BNSF—Berkshire’s rail subsidiary, only under pressured conditions, such as regulatory approval of a Union Pacific/Norfolk Southern deal. Despite the lowered target, the firm remains optimistic about CSX’s long-term prospects.
CSX Corporation (NASDAQ: CSX) is a leading North American rail-based freight transportation company that provides services such as traditional rail transport, intermodal container and trailer movement, and rail-to-truck transloading.
1. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 89
Upside Potential as of August 29: 17.31%
Union Pacific Corporation (NYSE:UNP) is one of the best railroad stocks to buy right now. On August 25, the company confirmed the addition of 15 new Focus Sites across eight states. Twelve of the sites are located along short line railroads, therefore expected to offer easy access to the 32,000-mile rail network.
The new Focus sites provide an avenue for Union Pacific to concentrate resources and manage logistics, therefore providing targeted services to customers. The focus sites are expected to spur local economic growth and facilitate easier connections for businesses to rail and access global markets.
“Our partnerships with short line railroads are helping to expand our network’s reach while providing businesses easier and faster access to our 23-state network,” said Kenny Rocker, executive vice president – Marketing and Sales. “With the help of short lines, shippers will have greater access to both domestic and global markets, including Mexico, Canada and some of the nation’s largest ports in Los Angeles and Long Beach.”
Union Pacific Corporation (NYSE:UNP) is a major American company that provides railroad transportation services. It ships a variety of goods, including agricultural products, automobiles, coal, and forest products, and plays a critical role in the global supply chain.
While we acknowledge the potential of Union Pacific Corporation (NYSE:UNP) as an investment, 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 UNP and that has 100x upside potential, check out our report about this cheapest AI stock.
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