Given the severity of the pandemic, we’re all hoping for a quick economic rebound. Much of the market’s recent moves higher have been on the strength of that possibility. Well, our leading transportation pick isn’t just rising on hopes. It’s actually seeing the results of a rebounding economy firsthand.
Our pick is one of the largest railroads in the United States. Its network of rail lines crisscrosses all of America as well as Canada and Mexico. This huge moat makes it a leader in the sector and nearly all goods—flowing from every direction—crisscross its network at some point. This is huge news given that manufacturers, retailers, and other consumer goods businesses are finally producing again. Because of this strength and large moat, our pick managed to realize a whopping 17% jump in its EPS during its last reported quarter. That’s very impressive for an economically sensitive stock. It also shows how economic growth is returning.
But the best days for our pick could be ahead.
That’s because the incoming Biden Administration is once again pushing for international trade. Sanctions are expected to be removed, border walls will be scrapped, and former trade allies are once again being welcomed into the fray. As one of the only railways that cover all of North America—including many entryways to ports—our pick should see freight volumes rise in the future. And with its moves to reduce logistics costs and boost margins working well, higher profits are assured.
For investors, our transportation pick represents one of the strongest ways to play the rebounding economy.
To summarize, here are five reasons why you should own this stock:
- It operates a logistics monopoly of irreplaceable assets throughout the entire country.
- It has paid dividends on its common stock for more than 100 consecutive years.
- It is a big winner from the Biden Administration and reopening old trade agreements.
- It is a rebounding economic play with rising volumes and earnings.
- It has a healthy payout ratio of 46% and growing yield of 1.87%.
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