Whether or not you want to call it saving the best for last, NorfolkSouthern
Reported revenue rose 17% this quarter as the company coupled a 5% increase in volume (as measured by carloads) with a nearly 12% improvement in pricing and mix. Even granting that some of that pricing improvement was from fuel surcharges, pricing is still clearly quite strong across the sector.
Norfolk also made further strides in its operations. Operating expense growth was contained to a 12% rise, and the operating ratio improved meaningfully from the year-ago level. That, in turn, helped fuel a very solid rise in earnings.
So what is out there that might derail this boom for the rails? Given that pricing is such a big part of top-line growth these days, that's an obvious candidate. It may be perfectly true that the rails are now more disciplined on price (and less willing to compete by slashing prices), but there's obviously a limit to what they can do with rate increases.
And there is, of course, the overall economy to consider. It might take a while for utility coal stocks to rebuild no matter what the economy does, and it's also true that agriculture is not so sensitive. But what about construction materials, chemicals, intermodal shipments, and so on? If companies aren't getting the purchase orders, they obviously aren't going to have a need for rail shipments.
But that's all admittedly tough to assess. In the meantime, focus on core Foolish principles -- identifying good companies trading for attractive prices -- and you should do OK.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
