Union Pacific is just a hair below its all-time high set in 2008 before the stock market plunged.
The company is one of the largest railroads in North America, operating primarily in the western two-thirds of the U.S. Its 32,100 miles of track link every major West Coast and Gulf Coast port.
The company reports Q2 earnings on Oct. 21. In its latest quarter, the rail giant posted higher revenue on traffic growth and better pricing. Management said real price increases were expected to continue in 2010 in beyond.
According to data from the Association of American Railroads, shipping year to date is climbing across the board.
Metallic ores are seeing the biggest boom, with a 63.6% gain in carloads through Oct. 2 compared with the same period a year ago.
The transportation and rail industries have risks, though.
Union Pacific is exposed to many of the common risks of the rail industry, such as fuel prices, coal regulation and general economic trends, wrote Raymond James analyst Patrick Brown in a July 22 note.
Also, the company is more exposed than others to foreign currency fluctuations because roughly 30% of its revenue is import or export based.
The risk of regulatory changes has put Union Pacific on a lobbying offensive. It said it spent $1.28 million in Q2 lobbying on legislation to repeal railroad exemptions from antitrust laws and other issues.
There may be opportunities as the administration pushes for high-speed rails.
Illinois recently started work on a high-speed train, which will run on Union Pacific tracks.
The company's dividend works out to an annualized yield of about 1.5%. It was raised last May and in August 2008.
Union Pacific has a five-year EPS growth rate of 22%.
source: http://www.investors.com/
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