Western Railroad Discussion > WSJ: Rail stocks are hot again

The Wall Street Journal has a short column today on railroad stocks.  The takeaway is they've been hot, pay a good dividend, and aren't going away anytime soon.  Citing the success of Precision Scheduled Railroading (noted), railroads are squeezing more efficiency out of assets.With dividends included, the returns on shares of all the rails have been great since the collapse of the economy in 2009, which also marked the Berkshire purchase of BNSF.

More controversially, one analyst suggests a final round of consolidation may be coming, if this deal is approved. 

Paywall likely:   https://www.wsj.com/articles/railroads-growth-stocks-of-the-19th-century-are-hot-again-11617706806

People who don’t have to live with the consequences (of consolidation in this instance) are full of suggestions.

CW

Posted from iPhone

KCS has been strongly up waiting for a second bidder and CN was down this morning because CP is taking over the world.

Out 

Rail stocks are always "hot" when fuel prices climb.

Lackawanna484 Wrote:
-------------------------------------------------------
> More controversially, one analyst suggests a final
> round of consolidation may be coming, if this deal
> is approved. 

Wall St. elites are going to love exploiting the merger madness, damn the consequences afterwards. Looking back, we had the operational meltdown after the UP/SP merger 3 decades ago, for example. I can't predict what will happen after the next round of "consolidations" after KCS + CP is approved, but it's not going to be pretty.

Select excerpt from the readable portion of the article that's not "paywalled":

Trains were the Teslas of the 1800s.

Typical manipulation of hindsight to sucker Wall St. idiots to jump into railroad stocks, because they are afraid to "miss out on the next Tesla." Creates buying demand, so elites can sell into strength. People fall for this all the time, so my use of the word "idiots" is justified.

Since Warren Buffett’s Berkshire Hathaway announced in November 2019 that it would pay $44 billion including assumed debt for Burlington Northern Santa Fe, the market value of North American railroads has risen sharply.

Yeah, so has the market values of many companies that survived the 2008 financial crisis. Mastercard (MA) gained ~1,700% compared to 862% by the railroads mentioned in the article. Tesla (TSLA, IPO in 2010) gained ~13,700%, so using the S&P 500 (~300%) as comparison is typical financial media hype to sucker idiots to buy railroad stocks. For those who want to calculate the % I mentioned, you'll realize I "underestimated" the numbers to make the 862% look good, to further prove my point.

Buffett took advantage of the financial crisis and bought BNSF at a bargain ("Be greedy when others are fearful"). It's as simple as that. Many of us don't have the foresight AND the equity to take the risks like he has. Wall St.Journal will never be able to teach that wisdom from an article like this.

Don't even need to discuss "PSR" to take apart this article. Nothing personal against the author, or the Wall St. Journal. Hope more TO members learn to smell hype instead of being sheeps.
 

Many articles in the financial press are drawn from the hopes and wishes that deal makers would like to see happen.

When it comes time to spin off branches and secondary main lines, we will see similar articles.

Posted from Android

And G&W shortly will be moving 200,000 cars per month! Just sitting in the grass making noises like a carrot
waiting to snare the unwary bunnies. 

Out 



Edited 1 time(s). Last edit at 04/06/21 14:40 by callum_out.

cchan006 Wrote:
-------------------------------------------------------
> Since Warren Buffett’s Berkshire Hathaway
> announced in November 2019 that it would pay $44
> billion including assumed debt for Burlington
> Northern Santa Fe, the market value of North
> American railroads has risen sharply.

Nov 2019? Hmmm, hope that was from the article, and if so, just another reason to be wary of something so shoddily researched...

JG

When the WSJ is writing articles about “The hot trend” the bubble is about to burst. Just another paid for article by the AAR to get the dupes to buy WAAAAAYY over valued RR stocks.

Posted from iPhone

callum_out Wrote:
-------------------------------------------------------
> KCS has been strongly up waiting for a second
> bidder and CN was down this morning because CP is
> taking over the world.
>
> Out

CN did better today than CP.
CN finished the day down 1.56%.
CP finished the day down 2.38%.
ALLEN

 

The article says the Berkshire purchase of BNSF happened in 2009.

Lots of bargains in Wall Street's bargain bin back then.

Posted from Android

jgilmore Wrote:
-------------------------------------------------------
> cchan006 Wrote:
> --------------------------------------------------
> -----
> > Since Warren Buffett’s Berkshire Hathaway
> > announced in November 2019 that it would pay
> $44
> > billion including assumed debt for Burlington
> > Northern Santa Fe, the market value of North
> > American railroads has risen sharply.
>
> Nov 2019? Hmmm, hope that was from the article,
> and if so, just another reason to be wary of
> something so shoddily researched...
>
> JG

Should be 2009. When I copy and pasted, "November 2009" was highlighted and underlined, so I made a typo in the process of taking those out.



Edited 1 time(s). Last edit at 04/06/21 16:30 by cchan006.

Drknow Wrote:
-------------------------------------------------------
> When the WSJ is writing articles about “The hot
> trend” the bubble is about to burst. Just
> another paid for article by the AAR to get the
> dupes to buy WAAAAAYY over valued RR stocks.

We've had several "false alarms" for at least couple of years. Few TO members have hinted their knowledge of the market being "propped up" in which case this article might be another false alarm. I'm not disagreeing with you, by the way, but when what you say becomes "crying wolf" and no one cares, that is when we have to be on alert. 

Keep in mind that it's not just railroad stocks that are overvalued.

There are merits to the KCS/CP merger, which has already been discussed elsewhere. My problem with the article is that it is trying to brainwash people into thinking those merits might apply to other Class I railroads, SO BUY THEM NOW ahead of the other mergers ("consolidation"). 

Oh I couldn't invest in railroads, I'm too busy saving up to buy more Gamestop!  (And if you believe that I've
still got that long deal on a bridge)

Out 

Most RR stocks are WAY over valued right now. 🤷‍♂️

Posted from iPhone

And DO NOT work for a Class 1...??!!!

Posted from Android

Lackawanna484 Wrote:
-------------------------------------------------------
> Many articles in the financial press are drawn
> from the hopes and wishes that deal makers would
> like to see happen.

Agree.  "Deals" make (a lot of) fee income for the "facilitators", so the hopes and wishes here seem to be pretty obvious.  Wall Street is a strange place, the law of supply and demand suggests the number of fools needs to equal or exceed the number of geniuses for the place to survive, and the deal makers always seem to be able to find enough fools.

JBWX 



Edited 2 time(s). Last edit at 04/07/21 10:50 by jbwest.

JBWX for the win.

Posted from iPhone

Gamestop. Stock was $3 a share, social media drove it up a bit, and more finally went to $400 and fell. Major analyst remarked that
at best it was a 10 buck stock and he said he wouldn't even buy it at that price. Gamestop goes out and hires 3 ex-Chewy execs and
off goes social media again and up goes the stock. Fools enlightened by that reservoir of virtue and knowledge-social media.

Out 

callum_out Wrote:
-------------------------------------------------------
> Gamestop. Stock was $3 a share, social media drove
> it up a bit, and more finally went to $400 and
> fell. Major analyst remarked that
> at best it was a 10 buck stock and he said he
> wouldn't even buy it at that price. Gamestop goes
> out and hires 3 ex-Chewy execs and
> off goes social media again and up goes the stock.
> Fools enlightened by that reservoir of virtue and
> knowledge-social media.
>
> Out 

No. GameStop is a bunch of everyday people that are tired of Wall Street vampires coming in and destroying companies by shorting them.
The Gamestopers are out to financially ruin these pr&@ks that have been blood sucking Americans for the last forty years.
“ I’m with GameStop. To the Moon!”

Posted from iPhone