Would now be a good time to buy shares in railroads? Considering the current stock exchange trends and news, does anyone plan to buy shares in Union Pacific, CSX, BNSF, etc. anytime soon?
BNI (BNSF) Is trading at $73.(and change) up slightly at this hour. Was in the $80s last week. It is one of the few things in my portfolio making any money! Charlie
I saw a report the other day that says UP, followed by BNSF, then CSX were three of the better stocks OVERALL to buy. BNSF was said to be the strongest long term but UP is "cheaper" right now relative to the analysts perception of the company's value. I was considering one of the three but haven't decided which to go with yet.
Hi Tuna, I'm guess I'm kind of a news junkie. It was widely reported on the business channels that Buffet bought tons of BNSF stock over the last year. Kind of interesting; I think he is pretty optimistic about rail service.
I saw the report on one of the news channels while watching at my gym. I think it was MSNBC but I'm not certain of it.
Most railroad stocks have done very well for me in the last ten years that I have them. UP used to be the highest price, but lately have fallen pretty hard. BNSF has done wonders for me and KCS is looking up. NS and CSX are more middle of the road, probably are not going to make a ton, but probably not going to loose a ton either. My $.02
It depends on what you are looking for. If you want per share gains, then RR stocks are no better than anything else as it will be a while before things turn around. However, if you want something that will pay a dividend, typically even in hard times. RR stocks often do so. There is a downturn in shipped freight that will continue, but since fuel prices will eventually go back up, a good portion of it will need to be carried by rail to be shipped economically- which bodes well for the railroads. Although BNSF stock was bought by Warren Buffet, right now it's NOT a good deal. Because of the cost, the per share dividend is small on a percentage or cost/return basis compared to other roads. Buffet made his biggest purchases in 2007 before RR stock prices jumped (largely because of him). There's not a lot of room for it to go up at this time. Check a RR's stock price vs the number of outstanding shares, vs the market cap to get an idea for potential growth. Also, look for other roads with a similar freight profile. Why, because they are less affected by seasonal cycles in one industry, which in one of the pluses with the BNSF, as it has a varied profile. Although low priced at this time, you should know that Kansas City Southern has never paid a dividend on their common stock, only on their preferred. It's one of the reasons this stock has never risen to the heights of the other railroads. Last, one of the things that's keeping the RR stock prices up is many of the bigger railroads are engaged in a program to buy back their common stock. Norfolk Southern, UP, CSX, and BNSF are all doing this. So their per share price is helped with holding against the downturn because of the stock buy back programs. Now if the intent is to eventually buy back as much stock as possible, then the prices will stay up. However, if they have placed a monetary limit on their buy back, then once they reach the lmiit, prices will fall. So keep this in mind and do your research. Here's a 2007 Montana report that includes a section on the buy back. Although they criticize the RR's for doing so. There is a sound financial reason for the programs. http://wbc.agr.mt.gov/Producers/Transportation/TransportationReport_20070614.pdf Note most of the RR's are engaged in a 2-5 year buy back program which will take them through 2012 if they continue for 5 years.
