|
COPYRIGHT 2002 Adams Business Media
No matter what acts of war, acts of god or corporate meltdown befalls North America, stuff has still got to be moved around. That's a constant that makes the transportation sector one place to be during a recession.
The anticipation of an economic recovery has recently prompted a flow of capital into transportation, and some analysts think the recovery's delay has given investors more time to make some money.
"The first quarter is going to be interesting" says Jason Seidl of ABN AMRO. "I don't think it's going to be a strong one, and my guess is that investors may continue to put pressure on these stocks in the long term. However, based on what I've been able to observe over the years, they tend to run back quickly. The truckers more so -- they seem to be more sensitive to strong moves up or down and the rails seem to be more consistent."
Trains have served as the lifeblood of America since their invention, having inspired almost as many rock'n roll songs as love, so it's no wonder investors look to them for stability and consistency. The rails were a top five performing sector of 2001 and there were several factors riding on that.
The expectation of an economic turnaround caused people to seek exposure in cyclical stocks. Rail was boosted by a strong coal market, which provided 27% of volumes. While other things like autos and chemicals were very weak, the strong coal market helped the rail revenue line outperform a lot of the other transportation modes. Railroads outperformed other transportation sectors because the diversity of their revenue offers downside protection.
"This is a revenue story and a cost story," says Jill Evans of J.P. Morgan Chase. "On the revenue story it was coal, the diversity of...
Read the full article for free courtesy of your local library.
|
Bookmark this article
Print this article
Link to this article
Email this article
Digg It!
Add to del.icio.us
RSS
