Transportation stocks have been on the upswing lately. The Dow Jones Transportation Average recently hit a 5-month high. The flattening COVID curve and gradual reopening of the economy are driving this improvement in sentiment. The transportation comprises of companies that are involved in the movement of people and goods from one location to another. The sector includes several sub-segments like marine transport, road transport, freight and logistics, railroad, and other services. The railroad segment is particularly interesting because it is heavily influenced by energy prices. Generally, the top railroad stocks to buy are CSX, Union Pacific Corp, and Norfolk Southern Corp.

The Dow Jones Railroads Index has rallied 39% since hitting a low towards the end of March. However, Railroad stocks have still underperformed the broader market. For comparison, the S&P500 has gone up 55% since the March market crash. Railroad companies are seen as vital cogs of the economy as they transport agricultural products, commodities, finished goods, packaged foods, and electronics to consumers.

One of the best railroad stocks to buy is CSX Corporation. The company is a leading rail freight transport company in America. It operates about 21000 miles of rail tracks across the eastern US as well as the Canadian provinces of Quebec and Ontario. CSX also has access to 70 strategic ocean, river, and lake port terminals spread out over its area of operation. CSX is known for its cost-efficiency. It also has rights of way and a network of track which is impossible to replicate.

CSX’s stock has risen by 58% since the March market crash and is up 3% year-to-date. It has marginally outperformed the S&P500 since March 23rd, 2020. That makes it one of the top railroad stocks 2020 at a time when the broader railroad index has underperformed the S&P500. CSX stock also trades at a reasonable dividend yield of 1.38% as of 26th August 2020.