The birth of the American stock markets was in the railroads. Over a hundred years later, they remain the backbone of the transportation sector, and hence, of the economy as a whole. Neither planes nor ships nor automobiles have displaced their import, and nor are they likely to. With across-the-board increases in prices over the last few weeks as investors of all types look for securities that are both safe and profitable, the wise investor would do well to jump on before the train has left the station. Let’s look at five major railroad companies to see what should be bought before it’s too late.
CSX Corporation (CSX): The shares of this transportation stock have been struggling since its three-for-one split in mid June of this year. Trading closed at $21.67, down from $25.79 at the time of the split and a 52-week high of $27.06. The reason for this, as ever, is in the underlying profitability of the company. Its earnings per share of 1.62 is among the lowest in the sector, beaten by the likes of Norfolk Southern Corp (NSC) at 5.12, Union Pacific Corp (UNP) at 6.30, and even smaller railroad Genesee & Wyoming Inc. (GWR) at 2.49. The only stocks with lower earnings per share are micro-cap Pioneer Railcorp (PRRR) at .31 and small-cap RailAmerica, Inc. (RA) at .74, and both are significantly up for the week; PRRR is one of the largest percentage gainers across the market with inter-day trading putting it up 23.33%. Risk-averse investors have little incentive to look to CSX instead of market giants like Canadian National Railways (CNI) or Kansas City Southern (KSU), where high-yield investors would do better to look to stocks with less market presence but greater upward mobility. To continue reading, click here