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Enough top-performing CAPS members have turned bullish on Union Pacific (NYSE:UNP) recently to upgrade it from its long-held four-star rank to a more formidable five stars in the dynamically updated CAPS system. A total of 1,042 members have given their opinion on Union Pacific, with many of them offering analysis and commentary explaining the recent optimism.

Major U.S. rail operators Union Pacific, Burlington Northern Santa Fe (NYSE:BNI), CSX (NYSE:CSX), and Norfolk Southern (NYSE:NSC) showed increased year-over-year operating profit in the most recent quarter, and Canadian National Railway (NYSE:CNI) beat expectations. While demand has dropped for railroad services, their pricing power has remained intact, and Union Pacific expects to increase prices by 5% to 6% in 2009.

For Union Pacific, significant fourth-quarter increases in energy and agricultural shipping worked to offset decreases in segments such as autos, where GM (NYSE:GM) and Ford are struggling. Union Pacific also spent less on fuel in the quarter, and it benefits from the fact that most of its contracts have been written to recover higher fuel costs. It also has other means to combat potential future shortfalls in hauling commodities, including the ability to increase the number of already furloughed workers this year, if necessary.  

CAPS members like the sector’s competitive edge and expect railways to weather the recession better than alternative transportation such as trucking. Compared to peers, Union Pacific stands out with a lighter debt-to-equity ratio, which is probably one reason why Buffett has confidence in the railway. Berkshire Hathaway (NYSE:BRK-B) holds a stake in Union Pacific, but is also the largest shareholder of Burlington Northern.

To see what the very best CAPS analysts are saying now about Union Pacific -- as well as other winning stocks they are picking -- head on over to CAPS and have a look. The community research and resources in CAPS are totally free, unlike analyst opinions reserved for paying clients.

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Fool contributor Dave Mock recently upgraded his cowboy garb with a massive belt buckle. He owns no shares of companies mentioned here. Berkshire Hathaway (B shares) is a Motley Fool Inside Value recommendation. Berkshire Hathaway and Canadian National Railway are Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway. The Fool's disclosure policy has too much free time on its hands and leads the office contest for most paper clips stuffed into its nasal cavity.