This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Opportune Time for Railroad Stocks

Meanwhile the broad stock market is only up 20% over the past 12 years - with significantly more volatility:

Admittedly, 1999 was not a good time for the railroads, and presented a once-in-a-decade type of buying opportunity.

If you believe that higher-priced oil is going to increasingly force businesses and passengers to choose rail over trucks, ships or planes, then you should be looking to add railroad stocks to your portfolio.

And while I'm never thrilled to buy stocks when they're at or near all-time highs, there are still a couple of railroad stocks that I think deserve some attention.

Most notably: Guangshen Railway (GSH).

And yes, it's a Chinese company. And as with many Chinese companies, it's fallen out of favor.

Investors are increasingly fearful that every Chinese company CEO is cooking the books or worse. But Guangshen isn't some tiny, mysterious, fly-by-night Chinese widget manufacturer. Its the largest publicly traded railroad in China. Last year it transported nearly 85 million passengers and 68 million tons of cargo.

Those statistics aren't the kind that some CEO or accountant can obfuscate or inflate.

This company has been traded on the NYSE since 1996. And regardless of what happens to the Chinese growth or America's sovereign debt, it will likely continue to transport people and freight. In fact, if either one of those two trends breaks down, and China's growth stalls or America's debt hits the fan, it's likely that rail will be the only realistic choice for Chinese passengers and businesses.

Amazingly, you can buy Guangshen, today, for little more than its IPO price in 1996.

The railroad also sells for less than 11 times trailing earnings -- whereas the industry average is close to 18.

My best recommendation would be to average in to Guangshen shares - and to wait for inevitable anti-China sentiment to pounce on those dips.

Kevin McElroy is the editor of Resource Prospector.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
GSH $32.60 -6.30%
AAPL $127.11 -1.20%
FB $78.13 -0.86%
GOOG $535.21 -1.00%
TSLA $234.29 1.60%

Markets

DOW 18,047.58 -22.82 -0.13%
S&P 500 2,106.30 -8.19 -0.39%
NASDAQ 4,969.7320 -47.1970 -0.94%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs