The Class I operators in the United States appear to be reasonably valued for long-term returns. The balance sheets are in solid condition, they all have competitive advantages against new competitors entering the market, and some of them pay decent dividend yields.
The Rail Renaissance
Ever since the 1980′s when deregulation allowed the rail companies to operate more profitability, railroad stocks in general have enjoyed market-beating returns. Improved automation technologies, increasing congestion of highways (which haven’t kept up with increases in car and truck traffic since the construction was initiated under President Eisenhower), and changes in energy costs (railroads are far more efficient with fuel than trucks are), have allowed railroads to improve their operating margins over time.
Investors have different approaches to stocks that have performed well. Some investors believe that buying stocks in an uptrend is a smart buying approach, while other investors believe the exact opposite, and instead look to enter positions after big setbacks. Continue Reading »