Railroad stocks have been in the news off-late as “old economy” stocks start to gain favor among investors again. Railroad transportation companies also receive attention because of Warren Buffett’s investment in such stocks and his talks about why he likes BNSF. Recent deal announcements like the one between Canadian Pacific Railway and Kansas City Southern and CSX and Pan-Am merger add to the growing interest among investors. If you are looking for the best transportation stocks to invest in, then you may want to take a closer look at companies like CSX Corporation and Canadian Pacific. Such companies have a solid business model with competitive moats that can generate significant free cash flows. Plus, CSX pays a dividend, too, which is an additional reward.
An Overview Of CSX Corporation
CSX Corporation has its roots more than 180 years ago when the B&O railroad was chartered in 1827. From 13 miles of track, CSX now has 21000 route miles under its belt. Its network spans 23 states, and CSX provides rail, rail-to-truck, as well as intermodal transport services. It is a complete railroad transport company. The market cap of CSX Corporation is slightly above $75 billion, and the company is a Fortune 500 company. Railroad transportation is less carbon-intensive than other popular forms of transportation. So, from a sustainability point of view, a shift towards railroad transport can happen in a significant way. Additionally, railroad businesses can provide a good hedge against rising energy prices. CSX Corporation is among the top transportation stocks to invest in.
If you look at the long-term 15-year chart for CSX Corporation, then a clear uptrend will be visible. There were major pullbacks in 2008, 2015, and March 2020, but other than that, the candles are mostly green and heading up. According to Dow Theory, the stock is in an uptrend, making higher highs and higher lows. The stock has gained about 20% over the last 5-6 months.