Transportation Stocks

[fenders53]

I doubt this thread will be heavy traffic, but it seems like it might be a place to throw up sector specific ideas, and perhaps ask a question now and then, like right now.  

I purchased a few UNP shares last fall, so now I am paying closer attention.  I see Burlington Northern and Canadian Pacific locomotives daily.  I see rail cars from every brand imaginable.  I know the railroads operate in regions, and rails maintain their own tracks.  The regionality seems restrictive.  I assume they drop cars at a railhead and another rail company might hook up and finish the delivery on their main routes?  Or did I just make that all up?

[crimsonghost747]

Good idea for a new thread.

I view most transportation companies as utilities, I'm not sure if that is a very accurate comparison but the business model certainly seems similar. I'm not sure how well some of the transport companies would do during a recession though, as the amount of things being transported could fall severely.

Looking at railway stocks, they all seem to be perpetually overvalued though. Currently looks like P/E numbers are around 30 and dividends are below 2% for most. I actually didn't expect the div growth rates to be so high, the couple that I checked out (UNP, CP) seem to have it around 15%. Indeed that does make it look much more appealing.

I've decided to be lazy on this sector and just buy BIP. And so far it has worked well for me. They have a bit of everything, toll roads, rail roads, energy infra, telecom towers, data centers, ports etc. So quite well diversified and they have a pretty ambitious plan of buying assets, improving their efficiency etc. while collecting dividends, and then selling the asset and recycling the cash into another asset where they see a lot of potential for improvements. So far, it has worked well but I guess it is a bit more risky than just doing the whole buy & hold thing.

[fenders53]

They may be like a non-regulated utility but far more sensitive to the economy vs a typical US Ute. Who knows where airlines land at the end of this but I suspect the survivors operate as they have. Some of my attraction to rails is there will be buying opportunities for the long term holders. They seem like solid DGI stocks.

[ChadR]

NSC has done well for me. Great idea for a new topic. Airlines scare me too much to invest in them. And like crimsonghost I have also been adding to BIP to cover the rest of my transportation and infrastructure part of my portfolio.

[fenders53]

(01-20-2021, 06:03 PM)ChadR Wrote: NSC has done well for me.  Great idea for a new topic.  Airlines scare me too much to invest in them.  And like crimsonghost I have also been adding to BIP to cover the rest of my transportation and infrastructure part of my portfolio.

I picked a bad time to play with airlines.  I bought DAL because they had one of the best balance sheets in the industry.  Turns out they were in trouble about as fast as any other carrier.  They would be about my last choice with stable options in the sector.  I'll let somebody else trade them.  Owning commercial aircraft parts suppliers is close enough for me.

Many of the railroads are solid investments.  I may add another on a dip.  Same with UPS and FDX.  I traded them off the march lows and sold them too quick.  I may run a screen on mid-cap transports with some global exposure soon.  The Covid will subside and it will be too late.

And nothing wrong with being lazy in this or any other sector Crimsonghost. It's fun to pretend like we are masters of all sectors, but it just isn't so in my case. I do however live one mile from the rails and barge traffic. They move enough grain products overland and water to feed a continent. I even know employees in the industry. I'll put a little effort into informing myself.

[ken-do-nim]

I've been keeping an eye on Direxion's 3x leveraged Transportation Bull etf TPOR, but 5 years ago the price was $27.80 and today the price is $26.80, so it seems like a dud.

[crimsonghost747]

Now that I've seen quite a lot of railroad talk in the past days... what is the go-to railroad company right now? UNP?

[fenders53]

I own a small position in UNP. CN and CP were getting the buzz due to the KSU merger. They will all probably due well by fall. AG prices are very high and they will be trying to move as much to market as they can. The rails are most always expensive unless you buy them near the bottom of an economic cycle. That's my plan unless the market dips sooner.