The Top 10 Road and Rail Stocks of 2011
What a crazy year it's been for investors. The S&P 500 jumped up more than 8% by May, only to turn around find itself down more than 10% in August, mainly a result of the European debt crisis and Washington's inability to agree on a solution to our debt dilemma. Now, at the end of December, the S&P has fought back and is poised to end the year essentially flat.
While the markets as a whole didn't change much over the past 52 weeks, there were certainly companies that proved to be much more resilient and were able to post some impressive gains.
Here's a list of 2011's top 10 performers in the road and rail sectors.
Percent Return in 2011
|Dollar Thrifty Automotive Group||48.6%|
|Kansas City Southern (NYS: KSU)||39.2%|
|Old Dominion Freight Line||26.7%|
|Canadian National Railway (NYS: CNI)||18.5%|
|Norfolk Southern (NYS: NSC)||14.3%|
|Genesee & Wyoming (NYS: GWR)||13.6%|
|Union Pacific (NYS: UNP)||12.7%|
|JB Hunt (NYS: JBHT)||10.1%|
|RailAmerica (NYS: RA)||10.0%|
Source: S&P Capital IQ. Only includes companies listed on U.S. exchanges that contain a market capitalization greater than $500 million. Returns as of Dec. 29.
Railroads was one of the few good sectors overall this year. There a few reasons that most railroad companies have been able to weather the poor economy so well despite normally being tied to the overall economy. Chief among them is that with crude oil hovering around $100 a barrel, moving cargo via rail looks much more enticing to many companies since rail is at least three times more fuel efficient per ton shipped than trucking.
But that didn't stop trucker Old Dominion from putting up a 26% return so far this year. The company has jumped more than 50% since October to all-time highs after a solid quarter and analyst upgrades.
Union Pacific kept chugging along, growing its stock price by more than 12% year to date. In its recent third quarter, the company posted record net income of $904 million, beating estimates. Union Pacific, the largest North American railroad, has done a good job increasing free cash flows this year and looks to have solid growth potential going forward. The company's stock was helped at the end of November after announcing a quarterly dividend increase of 28%, up to $0.60 per share, the company's second dividend increase of the year.
Short-line railroad operator Genesee & Wyoming also is having a good year, up more than 13% year to date. The company has benefited from investments in Australia and recently purchased Arizona Eastern Railway for $90.1 million. The acquisition of Arizona Eastern Railway will provide the company with rail service to a copper mine and smelter, which is important considering the current high demand for metals.
All of these road and rail companies had a solid 2011, but if you're looking for strong outperformers in the year ahead, you're in luck. The Motley Fool has created a brand new free report called "The Motley Fool's Top Stock for 2012." It highlights a company that we've picked out for explosive growth ahead. You can get instant access to the name of this company by clicking here -- it's free.
At the time this article was published Brendan Byrnes owns no shares of any company mentioned above. The Motley Fool owns shares of RailAmerica and Landstar System. Motley Fool newsletter services have recommended buying shares of Canadian National Railway and Genesee & Wyoming. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.