Warren Buffett has pointed to rail carloads as the single indicator he'd take to a desert island, and for good reason. As the most efficient way to transport many kinds of freight between cities, ports, factories, mines, oil and gas fields, and other focal points of the economy, railroads allow investors to gauge how well the tangible economy is doing.

So when North America's Class I railroads put in resoundingly strong results in the third quarter, savvy investors should take that as a sign of confidence on the part of both producers and consumers. In the following video, Motley Fool analyst Daniel Ferry breaks down the railroads' excellent quarter, and how investors can play it. 

 

Fool contributor Daniel Ferry owns shares of Canadian National Railway. The Motley Fool recommends Canadian National Railway and owns shares of CSX. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.