Four Transport Stocks Delivering the Goods

01/24/2011 2:54 pm EST

Focus: STOCKS

Elliott Gue

Editor and Publisher, Energy and Income Advisor and Capitalist Times

The best railroads and maritime shippers will thrive as global demand for commodities and goods continues to grow, writes Elliott H. Gue in Personal Finance.

The Pro: Elliott H. Gue, editor of Personal Finance
The Picks:

  • top US freight railroad Union Pacific (NYSE: UNP)
  • railcar maker Greenbrier (NYSE: GBX)
  • tanker operator Knightsbridge Tankers (Nasdaq:VLCCF)
  • container shipper Seaspan (NYSE: SSW)

The Takeaways:

  • Union Pacific is benefiting from strong demand for coal, grain, and gains pricing power when oil goes up
  • Greenbrier has seen a recovery in orders and could use the proceeds of a recent share offering to pay down debt
  • Knightsbridge is mostly shielded from the current tanker glut and should benefit from rising rates next year
  • Seaspan is also all but locked up for 2011 and is a play on growth in the global container trade

By the Numbers:

  • Union Pacific operates more than 50,000 miles of track; buy under $100. (Shares closed below $95 Friday)
  • Greenbrier leases 8,000 railcars and makes 60% of North American boxcars. Buy under $24. (Closed below $22)
  • Knightsbridge shares are yielding 8.7% and are a buy under $25. (Closed shy of $23)
  • Seaspan yields 3.6%. Long Beach, CA container volumes rose 25% in 2010. Buy under $14. (Closed at $13.94)

Quotable:
“Shipping remains the lifeblood of the economy. US railcar loadings have recovered to pre-recession levels, a sure sign that the economic recovery continues apace. The pulse of the global economy is also strong.”

Learn More:

  • The fundamentals look a lot better than the recent charts of transport stocks, Tom Aspray notes
  • Bryan Perry prefers another tanker stock as well as a maritime drilling specialist
  • Gue recently flagged two possible buyout targets in oil equipment

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