Railroad operator Union Pacific ( UNP) has been rated a buy since October 2005. The company's diversified business model and growth initiatives leave it well-positioned to gain from positive trends in the railroad industry. Third-quarter profit climbed 27% over a year ago to $532 million, or $2 a share. Revenue climbed 5% to $4.19 billion. Union Pacific has a diversified business model and serves a broad range of customers, putting the company in a strong competitive position and making it less vulnerable to softness in the housing and auto industries. Tightness in trucking capacity due to driver shortage, increased highway congestion and higher fuel prices has resulted in higher demand for rail transport recently. Also, with double-stacked railcars and computer-guided systems, railroads are becoming more competitive than trucks. On the down side, severe weather, currency volatility and higher-than-expected fuel prices could hurt Union Pacific's financial performance, and a recent change in Illinois tax law could increase the company's future income tax liability. Parker-Hannifin ( PH), which makes motion and control technologies and systems, has been rated a buy since October 2006. Its fiscal first-quarter net income increased 9% from a year ago to $229.60 million or $1.33 a share, bolstered by strong sales growth in its industrial, international and aerospace segments. Revenue increased by 9.2% to $2.79 billion over the same timeframe, driven by a mix of organic growth, strategic acquisitions and positive foreign currency exchange rates. Parker-Hannifin's return on equity climbed 217 basis points to 18.68%, and cash and cash equivalents rose 6.9% to $187.92 million. However, the company suffers from a declining operating margin as well as a high debt level. In addition, a significant portion of its revenue comes from customers outside the U.S., leaving it susceptible to adverse foreign policy and currency fluctuations.