Neubert: Adding Railroads To My 2012 Buy List

(Written by David Neubert)

Today I removed United Parcel Service (UPS) and added two rail companies, CSX Freight Trains (CSX) and Norfolk Southern (NSC), to my list of possible buys for the 2012 contra portfolio.

Why? Because CSX and Norfolk Southern present a better value—while I’d have to pay $16 per $1 of next year’s profit for UPS, I’m paying only $11 for the rail companies to net the same profit.

What’s more, they’re a bit better hedged against oil prices than UPS . While all three of these stocks face increasing costs with the rising price of fuel, CSX and Norfolk Southern also ship coal.  And coal prices (and increased shipping contracts) tend to rise with energy, giving these rail stocks a little boost.

I’ll have to have some transportation company in our portfolio, I’m just not sure which one yet.

If you’re looking for more detailed information on investing in rail stocks, you might want to check out this article by Mark Bern from Seeking Alpha.

I did buy all companies mentioned in an account held with another broker.  I include the details of the holdings in the mirror portfolio below.  I will do my best to update the portfolio as soon as possible after I trade any of the above-mentioned companies.  Drag the portfolio onto your playground to follow.

I own CSX and NSC and  I may buy more of both in the coming days.  I also own Union Pacific (UNP) but am likely to sell it at current prices before I buy it.   I do not own UPS.

David Neubert is Cofounder and shareholder of Kapitall, Inc., the sole owner of Kapitall Generation, LLC (“KapGen”), an SEC registered broker-dealer and FINRA member.  Mr. Neubert is not an associated person of KapGen or any other broker-dealer and, other than his indirect relationship described above, he has no control or affiliation with KapGen.

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