There isn't much that's sexy about Union Pacific ( UNP) -- until you look at the railroad's price action, that is. Shares of the freight transportation giant have rallied more than 23% so far this year. And the fundamental performance at UNP doesn't show any signs of losing steam in the second half of the year.
Union Pacific is the largest railroad in North America, with more than 32,000 miles of track that links 23 states, Canada and Mexico. And even though railroads strike most consumers as an antiquated means of transportation, the fact is that modern U.S. rail transports is an exceptionally efficient means of moving massive volumes of freight across the country. Compared with trucks, rail shipping generally costs around one-fourth as much per ton shipped, which makes trains a critically important part of the nation's transport infrastructure as oil prices tick higher.UNP has made operational leaps and bounds in the last five years or so. It improved its internal efficiency numbers dramatically in the years following the recession, carving out higher profit margins just as volatility in fuel prices spurred increased rail transport volumes. Now, as UNP benefits from the heated economic engine in the U.S., it's posting record numbers again. With rising analyst sentiment in UNP this week, we're betting on shares.