Rail stocks among transportation group's best performers in '07, report says

Rail stocks among transportation group's best performers in '07,
report says.
The transportation group as a whole, and rail and airline stocks in
particular, have performed well on Wall Street so far in 2007,
according to a transportation and logistics report recently released
by the Wall Street Transcript.
"While the economy has slowed, businesses have been more aggressive
at reducing inventories, and that has had a negative impact on
freight volumes year to date," the report states. "[But] things have
picked up somewhat of late and the outlook is brighter for the rest
of the year."
Rail, barge, airfreight and logistics companies have the best stock
growth opportunities, according to BB&T Capital Markets analyst John
Barnes, who's quoted in the report.
"There seems to be more and more business being directed to the
rails, and as they have improved service levels, that should
continue," he said. "They have some opportunities on things like coal
and additional intermodal business to offset some of their
housing-related goods. Coal really isn't impacted by the economy
[because] people are still going to turn their lights on and heat
their houses. So, the rails and barge companies have an advantage
there."
In the report, Barnes identifies Norfolk Southern Corp. and Union
Pacific Corp. as his favorite rail stocks.
NS has "industry-leading growth rates, very disciplined capital
allocation plans, a very conservative management team and a very
attractive entry point," he said. However, the Class I needs to prove
to investors that it can continue to improve the profitability and
hasn't maxed-out its margin improvement opportunities, said Barnes.
"Investors are beginning to look at Norfolk Southern and say, 'It has
an industry-leading margin for the US rails. Can there be much
more?'" he said. "All they need to do is prove that there are two,
three or four percentage points of margin improvement opportunity out
there, and the stock should continue to work just fine."
Meanwhile, UP has been delivering earnings in excess of expectations
for several quarters in a row.
"I don't see anything on the horizon that will prevent them from
doing more of the same," said Barnes.
The Wall Street Transcript provides commentary and insight services
to investors and industry researchers. To compile reports, the
company interviews chief executive officers and research analysts.
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stansrailpix
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Old news. The bull market in rails is getting long in the tooth. Best buying opportunity was 2.5-3 yrs ago.
See this ng (Apr 04) with subject:
UP shareholders meeting (was: Look what the creeps at UP did.)
They pay a reasonable but, not fabulous, dividend. I cashed out after the Buffet bump.
Paul -- Excuse me, I'll be right back. I have to log onto a server in Romania and verify all of my EBay, PayPal, bank and Social Security information before they suspend my accounts.
Working the rockie road of the G&PX
Reply to
Paul Newhouse

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