Shares of Kansas City Southern (KSU) are up 19% in 2012.
Railroad companies are dependent on the coal industry as they make high margins from the transportation of coal. Under the current administration, the EPA has imposed "significant regulatory burdens" on coal-fired power plants, shutting them down based on emission and mercury rules, according to analyst John Barnes.
Two Texas plants that account for 20% of Kansas City's Coal franchise are endangered and on the verge of shutdown.Under a Romney administration, there may be some pullback on the EPA rules that would buy these power plants more time to find a viable solution to meet the emission and mercury requirements. "This would be an immediate positive for the company because it would alleviate any near-term concern about coal-related revenue and contribution to profitability," Barnes wrote. 12 analysts rate the stock a buy, 8 a hold and 2 a sell or underperform rating, according to Thomson Reuters.
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