CSX Corp (CSX)

Doesn’t own any rails right now. He thinks this will have a bit of a slowdown now because oil for rail is a big margin business for a lot of these rails. He would let this ride for a bit to see what happens.

This is in an uptrend. When a stock is in an uptrend, it often tests the trend line. If this gets down to around the low $30, that may be time to buy it. Wait for a test of the trend line and for the stock to bounce off it. Until that happens, he wouldn’t buy it.

This has the least exposure to oil. There was a rocket ship tied to the rails’ backs as oil prices went higher. They were richly priced and priced to perfection. Believes the US and Canadian economy are going to improve, and these are very fuel-efficient type businesses. Also, very generous in returning capital to shareholders.

He prefers Union Pacific (UNP-N), which had a better growth profile. One of the things you are always looking at in US rails, is their exposure to coal, which has seen a weakening demand picture in terms of utilities, and more importantly, China. This is a decent company and you will do fine with it.

Cheap compared to Canadian National (CNR-T) and Canadian Pacific (CP-T). This is really a valuation play. Compared to Canadian operators, it is as good an operator with room to grow. With the volumes and price increases we have seen, he doesn't know if it can continue. Buying this is a better option than being in the Canadian rails.

Likes the way this rail is priced. It trades at a big discount to the 2 Canadian rails. Well run. The exposure here is with their coal business, but he thinks that is more than offset by the industrial expansion that is going on in the US.

The fundamentals of the railroads in North America are about the strongest of just about any subsector. The only problem is the valuations. They have done exceptionally well over multiple years, and the majority of them are in the mid-20s valuation.

Does not see any problems with the chart. Has been in an uptrend since beginning of 2013. There is nothing wrong with it technically. Acquire at the bottom of the trend line and reduce at the top.

Coal oriented, so earnings have lagged, but only back a year. It is starting to come out of that and it looks like they are going to show better earnings growth at a much cheaper valuation than Canadian National (CNR-T) or Canadian Pacific (CP-T).

The rails are still in play as far as he is concerned. They want to work higher. Chart shows an elevated base in 2012, and then it moves higher. The transportation section has corrected down to the 200 day, and now we are rallying back. There is no sign of a top as yet.

He is a big believer in the railroads and transport. This has the lowest valuation and he is hopeful that better things will happen as the coal demand improves.

(Top Pick Aug 1/13, 23.86%) There was still skepticism on the valuation. Last quarter was challenging because of the weather and increased costs, but they did a good job of offsetting the coal headwind. There is still a lot of run room on the intermodal side so she continues to own it and sees good upside on the stock. It’s still a pretty decent valuation.

Valued less expensively than Canadian rails. Has no problem with it. He has no exposure to rails right now. It is slower growth than Canadian rails.

Rails have all really done quite well. His sense is that there has been a bit of a railroad bubble in that people have been so optimistic about oil by rail. Expects there will be increased regulations such as the number of rail cars and the quality of them. It will be more expensive to lease new rail cars. He would be looking at railcar owners. Element Financial (EFN-T) are getting into leasing of rail cars, which is one you could look at. All the rails look pretty pricey here.

Likes railway industry. His choice is CNR because it is the most profitable and best run. But Canadian railroads trade at a premium over US ones. He would go with the better company.