This is the busiest week of the earnings season with lots to choose from. More than 1,000 companies (170 or so from the S&P 500) will be on the docket. We actually prefer less activity, as it can be overwhelming and many opportunities will be missed. You can’t trade everything, after all.

This week, we’re focusing on one of our favorite sectors, the railroads. We recently had excellent success with CSX Corporation (NYSE: CSX), which gave our Winning Edge subscribers a 45% profit in about a week thanks to a solid earnings report. Union Pacific Corporation (NYSE: UNP) followed suit last week, reporting a 51% jump in earnings. Next up we have Norfolk Southern Corp. (NYSE: NSC), which reports after the close on Wednesday.

Analysts expect a 35% earnings increase from the past quarter, which is modest compared to the 60% growth logged in the previous two quarters. And the stock usually does well after reporting, having gained ground over the two weeks following four of the past five reports.

As for the charts, NSC has been climbing for the past two months, gaining 20% since late August. The rally has the shares trading at a two-year high along the combined support of their 10-day and 20-day moving averages. Overhead resistance is largely non-existent until the all-time high around $75. That leaves another 20% of upside rally room.

Sentiment isn’t a factor in this trade, as it remains largely positive. But low put/call and short interest ratios, along with 70% “buy” ratings from analysts, should be expected for a stock hitting multi-year highs.

Railroads are one sector that stands to benefit first from the economic recovery, as sluggish as it might be. We’re already seeing the turnaround with increased shipments, higher shipping prices, and enhanced productivity. Some railroads have already reflected this success with solid earnings reports. NSC is next. Hop on board with the NSC Nov 60 Calls.