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Choose Your Favorite Beatle

Christopher Barker
April 26, 2012

The railroads have done it again! Displaying dazzling resilience through all phases of the business cycle, these icons of American industry continue to haul their weight in gold when it comes to delivering shareholder value quarter after quarter.

Choosing a favorite among the group is a bit like selecting a favorite member of The Beatles. They are each incredibly talented in their own right, and the real magic happens when you hear them all together. Although Norfolk Southern (NYSE: NSC  ) is my top pick on the rails, the seemingly unstoppable momentum of the entire group of North American railroads is like music to investors' ears no matter which operator they may prefer.

Aggressive share buybacks reduced Norfolk's average share count by 7.7% compared with the prior-year quarter, turbocharging a 26% increase in net earnings into a phenomenal 37% increase in earnings per share. Competitor Union Pacific (NYSE: UNP  ) ripped up the rails in 2011 with a similarly impressive campaign of share repurchases, and enjoyed a 39% surge in per-share-profits. CSX (NYSE: CSX  ) unloaded a more modest net profit increase of 14% for the first quarter, but its own lower share count yielded a full 23% growth in earnings per share. These locomotives are busy loading the pockets of investors with enhanced shareholder value, and paying dividends all along the way!

Norfolk Southern improved its operating ratio all the way to 73.3% from 77.1% in the prior-year period. That's a fairly studly performance, but Canadian National Railway (NYSE: CNI