N***i
发帖数: 2063 | 1 By: Zacks Equity Research
June 15, 2010 | Comments: 0
KSU | CNI | CP | CSX | NSC | UNP | BRK.A | BRK.B
Along with all other industries in the U.S., railroads also suffered during
the economic downturn. Freight rail is a “derived demand” industry --
demand for the rail service is tied with demand for the products that the
railroads haul. Rail traffic, therefore, acts as a solid barometer of the
overall health of the economy.
Since around 2003−2004, a number of factors have led to an increase in
rail freight volume in the U.S:
* Rising fuel costs led to an increased demand for rail, since railroads
are on an average four times more fuel-efficient than trucks.
* A surge in U.S. imports and record U.S. agricultural exports boosted
rail shipments to and from ports.
* A rise in natural gas prices caused power plants to burn more coal to
generate electricity, and most coal is shipped by rail.
* Railroad investments in capacity, innovations and use of technology
led to service improvements and enhanced reliability.
By 2006, America’s railroads were carrying more freight than ever before in
the country’s history. However, the recent downturn that officially began
in December 2007 witnessed reduced traffic and volumes. In 2009, carload
traffic was down 16.1% compared with 2008 and down 18.2% compared with 2007.
With the economy now out of the recession, the fortunes of the railroad
industry are also on the mend. The overall sentiment with respect to
railroads is clearly improving, with total traffic for the 17th week of 2010
increasing 15.0%, preceded by a traffic increase of 14.8% year-over-year in
the 16th week, 16.1% in the 15th week and 17.2% in the 14th week. The
volumes grew steadily due to a pick-up in end market demand. Moreover,
structural cost cuts during the downturn are expected to help railroads
generate high incremental margins.
Although the macro picture has improved, the recovery appears to be sluggish
and fragile, at least over the next few quarters. Our long-term outlook for
rail transport is positive. As the U.S. economy recovers, manufacturing
production picks up and consumers begin spending again, industry revenue
will return to steady growth. Adding to our confidence is Warren Buffett’s
investment in the sector − Buffett’s Berkshire Hathaway (BRK.A -
Analyst Report, BRK.B - Analyst Report) acquisition of the rail company
Burlington Northern Santa Fe is what we are talking about here. His
investment in the group is clearly a seal of approval.
On a modestly negative note is the lingering concern about legislative/
regulatory changes that may affect industry profitability and operating
conditions.
OPPORTUNITIES
One railroad company that we like with a Zacks #1 Rank (Strong Buy) is
Kansas City Southern (KSU - Snapshot Report), which has great momentum. Its
capital position improved with increased liquidity and reduced leverage,
followed by the recent equity issuance. Management expects double-digit
growth in fiscal 2010, with volume growing in the mid- to high-single digits
along with growth in revenue yield. We are optimistic about new business
wins and growth prospects for fiscal 2010 and beyond, given the overall
improvement in the economy.
Another of our picks is CSX Corporation (CSX - Snapshot Report), which looks
attractive based on the its earnings power, pricing power, potential
improvements in network fluidity, cost controls, probable improvements in
safety and fewer distractions. Cost-cutting efforts undertaken during the
past few years will now accrue to the earnings. Steady pricing, improving
volumes and cost saving efforts will likely help the company to outperform
its peers in the near term.
Canadian National Railway (CNI - Snapshot Report) is also poised to benefit
from the eventual rebound in the economy as suggested by the recent volume
gains.
Elsewhere, we are Neutral on Canadian Pacific Railway (CP - Analyst Report),
Norfolk Southern (NSC - Snapshot Report) and Rail America (RA). Our Neutral
recommendations for these operators primarily reflect the lack of near-term
earnings momentum in their businesses.
WEAKNESSES
The economic growth is tardy and difficult conditions are expected to
continue through 2010, with U.S. consumers still conservative in their
expenditure. Coupled with this, the new home construction market continues
to be weak, which in turn affects a number of commodities transported.
Growth in automotive sales also will take time before getting into full
swing. These sluggish economic conditions will delay the industry recovery.
We shouldn’t lose sight of the growing concerns about the sustainability of
the U.S. recovery given the headwinds from Europe and uncertainty about
China’s outlook. While we view the U.S. economic growth trajectory to be
essentially on track, some downside risks can not entirely be ruled out. And
given the economic sensitivity of the rail transport sector, any diminution
of the U.S. growth prospects remains a risk factor for the industry.
Another potential headwind facing the rail industry is the ongoing debate on
increasing regulations in the industry. If this materializes, it may weigh
on further efficiency gains and earnings growth.
http://www.finviz.com/screener.ashx?v=211&t=KSU,CNI,CP,CSX,NSC,UNP,BRK-A,BRK-B | g***y
发帖数: 1025 | | L********l
发帖数: 575 | | d****7
发帖数: 2241 | 4 Thanks for the great post. Is it too late now to act on the news?
during
in
【在 N***i 的大作中提到】
: By: Zacks Equity Research
: June 15, 2010 | Comments: 0
: KSU | CNI | CP | CSX | NSC | UNP | BRK.A | BRK.B
: Along with all other industries in the U.S., railroads also suffered during
: the economic downturn. Freight rail is a “derived demand” industry --
: demand for the rail service is tied with demand for the products that the
: railroads haul. Rail traffic, therefore, acts as a solid barometer of the
: overall health of the economy.
: Since around 2003−2004, a number of factors have led to an increase in
: rail freight volume in the U.S:
| c****2
发帖数: 1711 | 5 买不起啊。
【在 g***y 的大作中提到】
: 看了一下都不便宜啊
| y*****l
发帖数: 5997 | | L********3
发帖数: 2272 | | e*n
发帖数: 1511 | 8 好几个股都跟一个模子里刻出来的一样。
【在 y*****l 的大作中提到】
: 巴菲特收购BNSF，是看好铁路运输行业：垄断，低价，载货量大，环保。
: 间接也看好煤炭。
: 铁路:
: http://www.finviz.com/screener.ashx?v=211&f=ind_railroads&o=price
| y*****l
发帖数: 5997 | 9 这些都是以前公司的客户，还有一个澳洲矿业老大必和必拓，BHP，实力很强。
http://www.finviz.com/quote.ashx?t=BHP&ty=c&ta=1&p=d&b=1
during
in
【在 N***i 的大作中提到】
: By: Zacks Equity Research
: June 15, 2010 | Comments: 0
: KSU | CNI | CP | CSX | NSC | UNP | BRK.A | BRK.B
: Along with all other industries in the U.S., railroads also suffered during
: the economic downturn. Freight rail is a “derived demand” industry --
: demand for the rail service is tied with demand for the products that the
: railroads haul. Rail traffic, therefore, acts as a solid barometer of the
: overall health of the economy.
: Since around 2003−2004, a number of factors have led to an increase in
: rail freight volume in the U.S:
| N***i
发帖数: 2063 | 10 Thank you, daxiang
【在 y*****l 的大作中提到】
: 这些都是以前公司的客户，还有一个澳洲矿业老大必和必拓，BHP，实力很强。
: http://www.finviz.com/quote.ashx?t=BHP&ty=c&ta=1&p=d&b=1
:
: during
: in
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