Please ensure Javascript is enabled for purposes of website accessibility

5-Star Stocks Poised to Pop: Union Pacific

By Brian Pacampara – Updated Apr 6, 2017 at 10:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Market-trouncing returns could be written in this 5-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, railroad giant Union Pacific (NYSE: UNP) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Union Pacific's business and see what CAPS investors are saying about the stock right now.

Union Pacific facts

Headquarters (Founded) Omaha, Neb. (1862)
Market Cap $50.9 billion
Industry Railroads
Trailing-12-Month Revenue $18.9 billion
Management CEO James Young (since 2005)
CFO Robert Knight Jr. (since 2004)
Return on Equity (Average, Past 3 Years) 14.9%
Cash/Debt $1.7 billion / $9.4 billion
Dividend Yield 2.3%
Competitors Canadian National Railway (NYSE: CNI)

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 1,273 members who have rated Union Pacific believe the stock will outperform the S&P 500 going forward. These bulls include All-Star TMFBuck and dreamjob.

This past fall, TMFBuck touched on the trends working Union Pacific's favor: "Very good business with tailwinds. ... [T]hey will continue to benefit from a cost stand point vs. trucks. When the economy turns they will benefit as well."

Over the next five years, in fact, Union Pacific is expected to grow its bottom line at a solid rate of 15% annually. That's slightly faster than that of other railroad stocks like Canadian National Railway (14%), CSX (13%), and Canadian Pacific Railway (NYSE: CP) (10%).

CAPS member dreamjob expands on the outperform argument:

[Union Pacific] is pumping out cash, [return on invested capital] has been increasing over the past 5 years ... and earnings look to be growing faster than sales (over past 4/5 years). Would like to see it a little cheaper, but I think this is a great business, and I'm willing to pay up a little bit for it. All aboard.

What do you think about Union Pacific, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Canadian National Railway.  

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.