Think of a booming industry, an industry with potential to reach all-time highs this year; an industry hiring aggressively to keep up with demand; an industry, in short, on the up-and-up. Yes, that's right, I'm talking about the rail and freight business. Let's take a look at why this is so, and what you can do to profit from it.
A strengthening industry
The Association of American Railroads reports that 2012 could very well be the highest-volume year ever for U.S. freight, and lauds the "remarkable" rail recovery since the lows of 2009. It makes sense; when rail is compared head-to-head with trucking, it comes out less expensive for longer distances. Couple that with a fuel efficiency per ton shipped around four times that of trucking, and it's no wonder rail is on the rebound!
Vertical integration nation
A slightly more indirect way to invest in the future of freight shipping is to take a look at some companies that manufacture the actual equipment and cars that companies like CSX use. There are a couple worthy players in this space. The $1.8 billion company Trinity Industries
Though it's smaller than the other two companies we've considered -- its market cap is $400 million -- Greenbriar Cos.
If you believe in the continued resurgence of rail, then CSX, Trinity, and Greenbriar are worth a good look. Whether it's good dividends, an improving sector, or enticing valuations, we've seen that these stocks may be good places to let your money ride.
Although oil prices have taken a hit recently, the incredible demand for freight shipping could signal that oil is near a bottom. A steady positive trend in commercial activity coupled with a booming population facing enormous transportation issues may force energy prices dramatically higher. Take a look at the Fool's free report, "3 Stocks for $100 Oil," and position yourself to profit from higher energy prices today.
Fool contributor John Divine owns none of the stocks mentioned in the story above. He is a fan of the song "I've Been Working on the Railroad." You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.
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