Jim Regan

Norfolk Southern - Why I'm Bullish

While I do like the rails, this analysis misses what is perhaps the most important point: location. There is a reason that I continue to reiterate UNP (and to a lesser extent, BNI) over names like Norfolk Southern... and that is that the Eastern region of the United States has been as slow as molasis with less of a sign of bottoming. UNP's CEO Jim Rogers has reiterated his belief that UNP's volume has troughed out... and they are much more efficient in maintaining workers for the eventual recovery (something NSC isn't handling as well). The west is the most dominant for the two number one cyclical and still-healthy deliverables: ag and coal. They deserve that premium spready (if not a heck of a lot more) over NSC for these reasons... so simply claiming that their valuation is better than the pack is not true.

Again, I think you did a very well and thourough job with this and I appreciate anyone who wants to pump the rails up as I think this is a terrific buy for the long run. However, please keep in mind what I have pointed out to you today as a potential hazard to your assumptions.

Regards,
-Jim Regan, BullishBankers.com

All Aboard for Railroad Opportunities

While I won't address the first two paragraphs of your reply, I want to note that we DO in fact "have money in this country" and that your point on automotives is extremely off base because the percentage of ANY rail company's shipments in the auto unit is going to be less than 10% of the total... typically around 5%. Let's not point fingers here without considering who moves what!

@ railroad engineer: I understand the concern... but I think it is fair to say that we all realize things are tough. Management at companies like Union Pacific, Burlington and CSX saw this coming... and actually mentioned it in the third quarter calls. Granted, volumes have been worse than expected... but when you look at how these stocks have traded in the past 3 months, it is getting ridiculous. Things are bad... but not THAT bad, and the future is a lot brighter than analysts are painting it to be. This is a buying opportunity in my professional opinion.




On Dec 28 09:39 AM cnwtrainman wrote:

> The stock market is a ponzi scheme and anyone in it will eventually
> be taken. Even Warren Buffet is losing millions these days. Unless
> and until this country decides that it has to manufacture goods and
> not merely produce services, we are in trouble in every sector.

>
>
> Hopefully this new administration will keep its promise to get us
> out of NAFTA and GATT and we can admit that selling insurance to
> each other just wasnt the way to go.
>
> Railroads are in trouble, bottomline we have no money in this country.
> We cant buy things because we dont make things. Both Obamma and McCain
> embraced nuclear power and other than coal and stacks what do railroads
> carry these days? Autos? Yeah tie your future to that bunch!

All Aboard for Railroad Opportunities

CSX has been getting dumped by TCI, and their biggest holding is UNP but they seem to be maintaining their position in the company for the time being. This could be a long-term bullish signal as they price-averaged down at $60/share but are still buyers down at $40

All Aboard for Railroad Opportunities

This is true that shipments are down, but everyone expected that. Looking at Jim Young, CEO of Union Pacific, he stated in the third quarter call that they already expect volumes to be down significantly in the fourth quarter and first quarter 09... yet they still raised guidance as a lot of the pricing can outweigh it. Don't be surprised with earnings beats in January (when most rails report)