The railroad industry has caught the market’s attention lately as the federal regulator, the Surface Transportation Board (STB), highlighted issues and suggested ways to revitalize the country’s freight services. Notably, the U.S. freight railroad industry is dominated by a few big players, including Union Pacific Corporation (NYSE:UNP), CSX Corporation (NASDAQ:CSX), and Norfolk Southern Corporation (NYSE:NSC). Interestingly, these companies are part of the portfolios of some prominent U.S. politicians as well.
The Chairman of STB, Martin Oberman, hinted that the railroad industry is plagued with supply-chain issues. These headwinds are the byproduct of companies reducing their human resources to stay profitable in the business over the years. The situation, which got worse during the pandemic period, is still very fragile. In July 2022, President Joe Biden intervened to resolve issues between the unions and freight railroad companies.
To resolve the issues, the STB has proposed that the railroad companies increase their workforce to avoid any shipping delays. Also, the agency is keen to see that the industry players share their tracks with others and help enhance competition for the greater good of customers.
In light of this discussion, we believe that knowing more about the abovementioned U.S. railroad companies could be intriguing for investors, especially when they are of interest to U.S. politicians. Using the TipRanks Stock Comparison tool, a consolidated chart of the companies mentioned above is provided below:
Union Pacific Corporation (NYSE:UNP)
The $149-billion company, through its subsidiary Union Pacific Railroad Company, provides freight transportation and railroad services. In the past six months, five U.S. politicians conducted 27 trades (24 Buys and three Sells) on UNP stock. The most Buy trades were conducted by California Representative, Rohit Khanna. The Democrat’s last Buy transaction of 70-231 shares (valued from $15,000 to $50,000) was in July 2022.
Also, in July, Kathy Manning, the Democrat from North Carolina, bought five to 70 shares of UNP for $1,000 to $15,000. In the same month, Union Pacific’s Chairman, President, and CEO, Lance Fritz, said, “…we are positioned to grow volumes in the back half of 2022 while continuing to improve our service product.”
Is UNP Stock a Buy or a Sell?
In addition to U.S. politicians, retail investors have a Positive stance on UNP stock. The total number of portfolios with investments in UNP has increased 1.2% in the last 30 days, while that of top portfolios has gone up 5%. Meanwhile, analysts are cautiously optimistic about the stock and have a Moderate Buy consensus rating based on seven Buys and 10 Holds. Costs inflation and high fuel prices are major headwinds for the company. UNP’s average price target is $237.59, which suggests a mere 0.03% upside from the current level.
CSX Corporation (NASDAQ:CSX)
Shares of this $87.5-billion freight railroad transportation company have been traded six times (four Buys and two Sells) by Democrat Rohit Khanna in the past six months. The U.S. Representative from California bought 505 to 1,683 shares of CSX in July 2022. The transaction has been valued within the $15,000-$50,000 range.
In July, the company’s President and CEO, James M. Foote, said, “Though volatile commodity prices and persistent inflation have added uncertainty to the economy, our efforts remain focused on adding the resources needed to deliver improvements in our network performance, lift customer satisfaction and develop new rail service solutions to drive meaningful growth over the long term.”
Is CSX Stock a Good Buy?
Retail investors also believe in the company’s growth story, as the total number of portfolios with exposure to the CSX stock has increased 2.5% in the last 30 days. Remarkably, the top portfolios have gone up 10.9%. Also, Wall Street is unanimously optimistic about CSX, which commands a Strong Buy consensus rating based on 14 Buys and four Holds. CSX’s average price forecast of $35.71 mirrors upside potential of 6.41% from the current level.
Norfolk Southern Corporation (NYSE:NSC)
With a market capitalization of $60.3 billion, shares of the rail transportation company were purchased two times and sold four times in the past six months. Notably, Democrat Rohit Khanna sold 64 to 212 shares of NSC, for $15,000 to $50,000, in July. Also, the Congressman purchased five to 68 NSC shares, valued at $1,000 to $15,000, in June.
Also, a Democrat from New Jersey, Josh Gottheimer, conducted a partial Sell trade on four to 57 NSC shares in April. The transaction was valued at $1,000 to $15,000. It is worth noting that the company’s President and CEO, Alan H. Shaw, said that NSC was “seeing visible upticks in qualified employees and train speeds.” Shaw expects “to see further progress on service recovery in the months ahead.”
Is Norfolk Southern a Good Stock to Buy?
Interestingly, retail investors are Positive about NSC, as the number of portfolios holding NSC stock has gone up 2% in the last 30 days. Also, the number of top portfolios has increased 7.3%. On TipRanks, analysts are optimistic but cautious about NSC. They have a Moderate Buy consensus rating based on 11 Buys, nine Holds, and one Sell. NSC’s average price target is $261.86, representing upside potential of 1.93% from the current level.
Undoubtedly, the services provided by freight railroad companies are considered the backbone of the economic health of the United States. Democrat and STB Chairman, Martin Oberman, opines that “the business world has every reason to be nervous” because “if the railroads aren’t delivering, it certainly doesn’t help the recovery” in the country’s economy.
Notwithstanding the prevalent headwinds, the industry prospects are very bright for the years ahead. Prospective investors willing to gain exposure to the U.S. railroad industry could bank on the knowledge of the top U.S. politicians and consider investing their money in the companies selected by them. A chart depicting the price performance of Union Pacific, CSX, and Norfolk Southern is given below.
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