The best railroads and maritime shippers will thrive as global demand for commodities and goods continues to grow, writes Elliott H. Gue in Personal Finance.
The Pro: Elliott H. Gue, editor of Personal Finance
The Picks:
- top US freight railroad Union Pacific (NYSE: UNP)
- railcar maker Greenbrier (NYSE: GBX)
- tanker operator Knightsbridge Tankers (Nasdaq:VLCCF)
- container shipper Seaspan (NYSE: SSW)
The Takeaways:
- Union Pacific is benefiting from strong demand for coal, grain, and gains pricing power when oil goes up
- Greenbrier has seen a recovery in orders and could use the proceeds of a recent share offering to pay down debt
- Knightsbridge is mostly shielded from the current tanker glut and should benefit from rising rates next year
- Seaspan is also all but locked up for 2011 and is a play on growth in the global container trade
By the Numbers:
- Union Pacific operates more than 50,000 miles of track; buy under $100. (Shares closed below $95 Friday)
- Greenbrier leases 8,000 railcars and makes 60% of North American boxcars. Buy under $24. (Closed below $22)
- Knightsbridge shares are yielding 8.7% and are a buy under $25. (Closed shy of $23)
- Seaspan yields 3.6%. Long Beach, CA container volumes rose 25% in 2010. Buy under $14. (Closed at $13.94)
Quotable:
“Shipping remains the lifeblood of the economy. US railcar loadings have recovered to pre-recession levels, a sure sign that the economic recovery continues apace. The pulse of the global economy is also strong.”
Learn More:
- The fundamentals look a lot better than the recent charts of transport stocks, Tom Aspray notes
- Bryan Perry prefers another tanker stock as well as a maritime drilling specialist
- Gue recently flagged two possible buyout targets in oil equipment
