- Beneath this winter’s plentiful snow, railroads are emerging as a rare investment opportunity, J.P. Morgan analysts say.
- The surge in demand for coal from U.S. power plants is pushing up coal prices, and coal is by far the biggest cargo carried on U.S. rails, accounting for 41% of all rail tonnage and 21% of rail gross revenue; J.P Morgan argues that at some point, coal should provide a positive catalyst for railroad company stocks since it accounts for so much of their revenue.
- The firm likes eastern railroad plays CSX and Norfolk Southern (NSC) since their networks serve the highest concentration of coal-burning utilities in the part of the country hit hardest by the cold weather; Omaha-based Union Pacific (UNP) also is hauling a lot more coal as utilities rebuild their supplies.
The polar vortex is a perfect storm for railroad stocks, J.P. Morgan says
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