Stockchase Opinions

C. Kim Goodwin Union Pacific Corp UNP-N TOP PICK Oct 22, 2004

The fact that they have not been able to pass along their fuel costs is well known and management has already set the bar in expectations. Can increases their prices and shorten their price term contract.
$61.000

Stock price when the opinion was issued

Transportation
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BUY

They just reported: revenues beat though flat for the year, costs are under control, and they beat earnings. Total volumes were up, including fertilizer up 15%, and industrial chemicals 7%. Their report was better than CSX, though guidance was guarded and mixed, including a muted first half of 2024. It's good to buy now.

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TOP PICK
Stockchase Research Editor: Michael O'Reilly

UNP is Warren Buffet's  2nd favorite railroad to own (he owns BNSF).  It has paid its dividend for 125 consecutive years.  It is prudently using some cash reserves to aggressively retire debt and buy back shares.  It trades at 9x earnings and supports a ROE of 45%.  The dividend is backed by a payout ratio of 50% of cash flow.  We recommend setting a stop-loss at $207, looking to achieve $268 -- upside potential over 17%.  Yield 2.2%

(Analysts’ price target is $267.82)
WATCH

Been on a downtrend, though fairly priced. Earnings need to beat for shares to also rise. Trades at 18x forward PE and a PEG ratio of 1.7. A tailwind is US capex spending and all those materials that need transporting, like steel.

WATCH

His concern is its 18x forward PE. A railroad stock can grow only so much more than GDP. Pricing power is limited. He needs to see earnings outperform.

DON'T BUY

Transports haven't seen a tailwind lately. Has the sector bottomed? The timing is tough for transports now.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jun 04/24, Up 11.9%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with UNP is progressing well.  To remain disciplined, we recommend trailing up the stop (from $207) to $230 at this time.  

SELL

He sold UNP to buy Wabtec, because the former services only one geography while Wabtec goes everywhere.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Jun 04/24, Up 1%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with UNP has triggered its stop at $230.  To remain disciplined, we recommend covering the position at this time.

BUY

Operating income in Q4 +5% to $2.5 billion. Was held back by tariff talks; tariffs will hurt, but they have room to move with better volume and pricing. He targets $275.

BUY

Her choice in the space. Better cost management, strong network efficiencies, favourable long-term profit trend.