Four railroad stocks steaming ahead

Investors may want to hitch a ride with these wide moat companies once a pullback creates attractive entry points and as profitability picks up

Vikram Barhat 17 July, 2019 | 1:57AM

Train

The railroad sector has continued to grapple with a slew of negative forces. From bad weather to economic uncertainty and from the U.S.-China trade war to competitive truck pricing, the industry has been under pressure from a conspiracy of factors.

The Association of American Railroads (AAR) recently reported North American rail traffic volume for the first 25 weeks of 2019, as of June 26, was down 2.9% from the same point last year. And while the year-to-date Canadian rail volume is 2.1% higher, the combined North American volume, which also includes Mexico, fell 2% for the same period. But lower volumes only tell half the story. It’s an entirely different story playing out on stock market indices. The S&P 500 Railroads (Sub Index) has racked up a year-to-date gain of about 50% while the Dow Jones U.S. Railroads Index has shot up north of 27% for the same period, as of July 02, 2019.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Canadian Pacific Railway Ltd257.21 USD-3.17
CSX Corp77.98 USD-1.99
Norfolk Southern Corp201.78 USD-3.01
Union Pacific Corp176.39 USD-2.94

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry. He also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.