Railroad stocks are a group of equity securities representing publicly traded railroad companies that are based in North America. Within this group, most companies are largely capitalized with long operating histories. While passenger railroad service has been steadily decreasing, freight railroad shipments play a crucial role in the U.S. economy, especially when it comes to shipping oil and coal.
More and more, the United States is relying on railroads to move its new crude oil to refineries and storage centers. As recently as 2008, U.S. Class I railroads originated just 9,500 carloads of crude oil. By 2012, this number had jumped to 233,811 carloads, and in 2013, it exceeded 700,000 carloads. (Source: Association of American Railroads web site, last accessed January 31, 2014.)
A look at the charts makes me a bit nervous that the next stock market crash could be on the horizon. The fact is that the market has not witnessed a correction of any major proportions in excess of 10% since the stock market began to turn up in March 2009. Sure, we have had the occasional five-percent adjustments in stocks, but these periods of selling were short-lived, always followed by periods of buying support. I suspect we could be on the verge of another correction that could drive the major stock indices down to test their respective 200-day moving averages (MAs) after already breaching the key short-term 50-day MA. While we would all love to see stocks continue to creep to new record highs, this is not ... Read More
You can't blame newly installed McDonald's Corp. (NYSE/MCD) CEO Steve Easterbrook for not being enthusiastic about the fast food restaurant stock. I’m certainly not; you can see my negative view towards the seller of the “Big Mac” here. Even after Easterbrook's new strategy to turn things around, you can’t get angry at me for not getting too excited. (And then there’s YUM! Brands, Inc., which is looking pretty darn good in comparison—but more on that later.)
McDonald’s New Strategy Not Doing Much for OperationsWhat is McDonald’s doing to try to turn t ... Read More
I no longer own an “iPhone” and I don't have plans anytime soon to order the “Watch,” a smartwatch from Apple Inc. (NASDAQ/AAPL). Yet despite my personal needs, I do think Apple is the king of the mountain in the stock market’s technology space. Some are suggesting the iPhone will eventually meet its match, but I have yet to see this. Apple sold something like 74.5 million iPhones in its first quarter. This a huge number, and it could get even better if existing users of older iPhones decide to stay. I didn't; I switched to the “Samsung Galaxy,” which I feel is a comparable alternative to the iPhone. But this is not about my personal taste. The reality is that Apple ha ... Read More
Some say Alibaba Group Holding Limited (NYSE/BABA) is the Google Inc. (NASDAQ/ GOOG) of China. And that is currently the case at this juncture...until Google can gain a foothold in the country’s Internet technology sector. But that will not be easy. Comparing Alibaba to Google in the technology sector at this time is difficult. If we could fast-forward a few years, the answer to which Internet starlet is a better choice would likely be clearer. Google is currently nearly twice as big as Alibaba based on market capitalization. This on its own doesn’t mean that Google is superior; however, I will explain why I think it may indeed be the better choice now in the Internet technology ... Read More
Why the Restaurant SectorThis may be a surprise to you, but one of the top-performing sectors over the past few years has been the restaurant sector. While there has clearly been some euphoric buying, the fact that we are seeing stronger job growth and rising home wealth in the U.S. has helped as well. If you look at the chart of the Dow Jones U.S. Restaurants & Bars Index, you can see the upward moves, highlighted by several breakouts along the way, including the recent breakout from the sideways channel. I doubt the gains ahead will be as dynamic for the restaurant sector, but there will continue to be opportunities to accumulate stocks on price weakness.
Back in early October, I mentioned that some railroad stocks would be some of the biggest winners of the Bakken oil play in North Dakota and Montana and the tar sands in Alberta. My position still holds true today. Since last discussing pipeline and railroad stocks, Canadian National Railway Company (NYSE/CNI, TSX/CNR) has seen its share price climb more than 10%. Meanwhile, Canadian Pacific Railway Limited (NYSE/CP, TSX/CP) is up more than 15% and Union Pacific Corporation (NYSE/UNP) has increased 14%. Of the oil and gas pipeline stocks I mentioned, Magellan Midstream Partners L.P. (NYSE/MMP) is up more than 15%, while ... Read More
There’s more to the Bakken in North Dakota and Montana and the tar sands in Alberta than oil. Oil may be the primary opportunity for most investors, but there are a number of interesting secondary and tertiary investing platforms to consider. And when it comes to oil and petroleum products, one of the biggest growth areas has to be North American railroad stocks. Despite the fact that a new pipeline in the booming Bakken fields in North Dakota was recently completed, more ways to transfer oil are needed to keep up with production. That’s because North American production is outpac ... Read More