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There have only been a few buying opportunities for Class 1 Railroad shares over the last decade, and we think the current sell-off will be another.  Rails have underperformed significantly since late 2014, with Norfolk Southern giving back nearly a decade of relative outperformance.


  • A Long View of The US Railroad Industry:  Does industry performance have room for further gains?
  • Mistaken for Commodity Plays:  Volumes just haven’t grown commodity-wise in the past decade, and correlations with CRB are negative.  
  • Speed:  Rail speeds got clobbered last year.  Slower speeds pull costs onto the rails and slow revenue generation.  Rails are speeding up now, and that cost/revenue should come back out.
  • Valuation:  Reasonable range DCF, between different railroads and relative to historical metrics