CHICAGO, March 12, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeCanadian PacificRailway Ltd.(NYSE: CP), CSX Corporation(NYSE: CSX), Union Pacific Corporation(NYSE: UNP), Canadian National Railway(NYSE: CNI) and Norfolk Southern Corporation(NYSE: NSC).
According to the weekly data for March 3, North American Rail Freight Carloads continued to see results slide. Total carloads declined 3.48% year over year to 373,530 units, mainly due to a 9.5% drop in trailers. However, Intermodal and Container traffic remain healthy with 6.4% and 8.9% year-over-year growth, respectively.
Commodity wise, rail freight for the week ended March 3 registered maximum declines in its coal volumes (15.2% year over year) due to continued substitution with lower-priced natural gas impacting utility coal volume.
On the other hand, Petroleum products remain strong, driven by a 22.5% year-over-year increase in carloads. The surging crude prices remain attractive for railroads, especially in regions like North Dakota that lack pipeline facility and rely more on rail freight services.
Rail freight carriers like Canadian PacificRailway Ltd.(NYSE: CP) have already begun to capitalize on these market opportunities by expanding rail freight services. The company will be the only rail freight to carry crude from the soon-to-begin oil terminal in North Dakota's Bakken shale oil fields, carrying 35,000 barrels of oil per day. The terminal construction is underway near Van Hook in North Dakota by the U.S. Development Group, a Texas-based developer of rail logistics and terminal facilities.
Going forward, the recovery in the growth in the North American auto industry continues to bode well for Metal products, driving growth of 18.5% year over year.
The current scenario of North American Rail Freight suggests a strong momentum in freight prices rather than any significant additions in freight volumes. Class I carriers like CSX Corporation(NYSE: CSX), Union Pacific Corporation(NYSE: UNP), Canadian National Railway(NYSE: CNI) and Norfolk Southern Corporation(NYSE: NSC) continue to enjoy pricing discretion with an average pricing growth of nearly 4%-5% per annum while maintaining double-digit profit margin.
However, the on-going economic volatilities in the U.S. and abroad may keep these railroads' top-line growth under pressure in the near future. Moreover, the near-term growth for these companies will continue to be tempered by lower coal production, as forecasted by the U.S. Energy Information Administration.
Lower natural gas prices, coupled with a weak utility coal market have raised significant concerns. This is because utility coal makes up roughly a third of total coal shipments. Strong exports to Asian countries continue to remain a silver lining.
Currently we maintain a long-term Neutral recommendation on CSX Corp., Union Pacific, Canadian National, Canadian Pacific and Norfolk Southern. All these stocks carry a short-term (1-3 months) Hold rating (Zacks #3 Rank).
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.