Analyst Matthew Troy's name was misspelled in an earlier verison of this article.

NEW YORK ( TheStreet) -- Bullish days could lie ahead in both the near- and long-term for the publicly traded railroad operators, thanks in part to some heady investments and a little bit of luck.

The rail industry has seen the increased prevalence of intermodal shipping and gains in domestic exports of coal over the past few months, two trends that bode well for stocks in the sector.
Guangshen was among this week's railroad winners.

" There is a very big sector of traffic that currently moves by truck that could move by intermodal rail," said Daniel Keen, assistant vice president in policy and economics at the Association of American Railroads, or AAR. "Absolutely no question that railroads... do see intermodal as a potential growth market."

The term "intermodal" refers to containers that are shipped via more than one mode of transportation: i.e. from ship to truck to train.

As it stands, there are laws in place that limit the distances trains can travel to ship freight containers. Whatever distance remains between the train hub and the final destination must be shipped by a truck. A lot of companies in the past decided to forego intermodal to instead ship goods completely by truck or by plane.

But rising oil costs have left businesses strapped for cash, which means intermodal has become a cheap alternative.

One notable company that moved to intermodal in January was FedEx Freight ( FDX - Get Report), which announced at the start of the year that it would use intermodal for the first time. The shipping company said the decision was for a new "economy" service.

One reason for this choice has been improved track infrastructure which has made a serious dent in railroad shipping cost and enticed companies to save a few dollars by using trains instead of gas-guzzling semis.

The rail companies have spent billions of dollars on infrastructure to eliminate low overhanging structures. Low overhangs had prevented double stacked trains from traveling on certain lines; if a train cannot double stack, it ships less containers, which drives up costs. The alternative was to ship containers along the same line by truck. Railroads have significantly curbed this problem, which has given their customers an economical substitute.

Further, truck traffic density makes up one-third of all traffic along slammed Southeast interstate routes, which one railroad analyst who preferred anonymity said could drive intermodal use for companies who operate in the region like CSX ( CSX - Get Report) and Norfolk Southern ( NSC).

The AAR reported on Thursday that intermodal volume was up 6.4% for the week ending June 11 against the same week last year.

Investors could also leap for railroads as the latest forecasts call for 2011 coal exports to hit 100 million tons, a number that the railroad industry has not seen for about 20 years.

"Export demand for coal is growing rapidly," said Chris Jenkins, vice president of CSX coal service groups. " CSX export tonnages, which were in the 12 million to 13 million ton range five years ago expanded to 30 million tons in 2008, dipped a little bit during the heart of the recession, recovered to 30 million tons in 2010, and this year we expect to move about 40 million tons."

Judging by those numbers, CSX had a good year as the U.S. Energy Information Administration estimates total U.S. coal exports for 2010 hit 81.7 million tons.

Why are coal exports expected to surge in 2011? One reason is that Australia, a key player in the international sector, experienced massive floods earlier this year that froze the industry and paved the way for increased demand from American markets.

CSX warned investors that increased shipments in coal exports could decline after Australia resumed full export levels. But as Australia has recovered much quicker than expected, domestic exports have continued to rise in Europe and Brazil, which one firm said was a pleasant surprise for railroad analysts.

" The structural shifts in power generation back toward coal in developed countries such as Germany (which is shutting all nuclear reactors by 2022) should provide another leg of demand for U.S. steam coal well beyond 2011," Matthew Troy, an analyst at Susquehanna Financial Group, reported on Monday.

All-in-all, Daniel Keen said that between intermodal and coal, railroads could grow at a "real nice healthy clip."

Key railroad stocks that closed up for the week: Guangshen Railway ( GSH) at $20.73, or 2.6%; CSX at $24.81, or 0.6%; Kansas City Southern ( KSU) at $53.53, or 1%;

Those that closed down for the week: Union Pacific ( UNP - Get Report) at $100.01, or 0.7%; American Railcar Industries ( ARII) at $19.16, or 6.3%; RailAmerica ( RA) at $13.86, or -3.5%

-- Written by Joe Deaux in New York.

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