However, this group may have several investment opportunities as most of the railroads pay dividends and many have relatively low P/E ratios. So how do you analyze a railroad, besides looking at the usual statistics? First, you have to look at the items they transport. Is there a strong demand for the commodities that they haul? Is that demand expected to get stronger in the future?

In addition, you have to look at the cost of fuel for their locomotives, and their ability to pass on that cost to their customers. Here is a list of the major rails, most of which are traded on the New York Stock Exchange:

With railroads so heavily tied to fixed capital, this hardly seems like an industry that would have much appeal to modern investors. Even relative to other cyclical companies, it might seem hard for rail firms to generate much growth. After all, we can't expect carriers to build new routes as easily as the typical manufacturer might build a new factory.