You've Got A Monopoly If You Own These Railroads (UNP)

Last week I wrote about how CSX is doing well CSX and doesn't see a slowdown and as a result, here are a couple of long ideas for you on that note. Norfolk Southern NSC and Union Pacific UNP both report their earnings next week and I would expect them to echo the same sentiments that CSX did. The recovery is real and the railroads see no sign of a double dip recession. I dug through CSX's report and every major segment of their operations were up in terms of volume and price. Coal, intermodal, metals, chemical products and automotive products were all up strongly. Rail traffic was up 10.6% in June according to the Association of American Railroads. The industry trade group also said on Tuesday that transfers from trucks to trains are beginning to speed up. Intermodal traffic in June was up 19.2% compared with the same month in 2009, the largest year-over-year monthly gain since they starting keeping records in 1990. This should also be good news for Berkshire Hathaway BRK, which recently completed one of its largest ever acquisitions with the purchase of Burlington Northern. Many businesses, such as Kraft Foods Inc. KFT and Procter & Gamble Co. PG, have moved their freight to trains because of their growing reliability and fuel efficiency. If oil prices continue to climb over the years, as I expect them to do, you will see more and more goods shipped via rail for these reasons. This will be a hit to the trucking industry, but a boon for the rails. They are not cheap if you use metrics such as PEG or P/E, but these companies do deserve a place in my opinion in your portfolio. I would look to use any weakness to add these stocks. Disclosure: long CSX