- Summary: One sector that does not seem to be slowing is the railroad industry -- in the first half, trailer and container activity on the nation's rail lines was up 6.4% from last year. Commodity movement (grains, coal, metals) was stronger last year. Union Pacific, which reports today, has seen its stock jump 36% in the past 12 months, while CSX is up 47% in that period. But there are signs of a slowdown, and the stocks have begun to slump a bit. The housing sector's weakness means less lumber movement; it was already down 2.1% y/y in the second quarter, and 3% in June. While Union Pacific receives only 6% of its revenues from lumber transport, other less-diversified players may be hit particularly badly.
- Comment on related stocks/ETFs: Some of the smaller railroad stocks that could be hit hard by a slowdown: Norfolk Southern (NSC), Burlington Northern Santa Fe (BNI), Kansas City Southern (KSU) and Florida East Coast Industries (FLA). Speaking of lumber, Ashish Kelkar thinks timber stocks should outperform in an inflationary market.
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