Railroads are an integral part of Americana, and when many people think of railroads, they think about the nostalgia of the Old West and the role trains played in the industrialization of the nation.
While there’s certainly nothing wrong with waxing nostalgic when it comes to railroads, if you’re an investor you had better start thinking about railroad stocks in a more important light — i.e., as one of the best sub-sectors of an industry that can help you capture market-beating performance.
You see, when it comes to equity performance, transportation stocks in general are easily outpacing industrials and other sectors in 2014. Year-to-date, the Dow Jones Transportation Average is up 10.1%. Compare that to the Dow Jones Industrial Average, which is higher only fractionally, the Nasdaq-100 at +4% this year and the small-cap Russell 2000 Index, which actually is down 2%.
Helping to lead the transports higher are railroad stocks, many of which have vaulted to new all-time highs.
So, which railroad stocks are riding to new all-time highs, and which railroad stocks are likely to keep riding conditions in the sector higher? Here are three of my favorite railroad stocks that are anything but nostalgia.