Executives at two of the big U.S. railroad companies, CSX [NYSE: CSX] and Union Pacific [NYSE: UNP] report that growing shipment volumes lead them to feel optimistic about the growth of the U.S. economy. (CSX reported on January 16, and UNP on January 24.)
Railroads are often considered a bellwether for the economy, since they carry the products of a wide spectrum of industries, both raw materials and finished goods. While overall volume growth shipped by rail may be modest due to some areas that are uncertain, such as coal and agricultural shipments, the leaders of CSX and UNP see construction materials, steel, plastics, and e-commerce shipments all boosting growth. Many of their customers, they say, are planning to make capital expenditures, expand their facilities, and ship more goods.
Investment implications: The positive outlook on growth from some U.S. railroads suggests that the domestic U.S. economy remains in good health. Please note that principals of Guild Investment Management, Inc. (“Guild”) and/or Guild’s clients may at any time own any of the stocks mentioned in this article, and may sell them at any time. In addition, for investment advisory clients of Guild, please check with Guild prior to taking positions in any of the companies mentioned in this article, since Guild may not believe that particular stock is right for the client, either because Guild has already taken a position in that stock for the client or for other reasons.
