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Did you manage to catch that Union Pacific (UNP) train leaving the station? If you did as recommended in my buy rating on March 27, 2009 at $43.00 per share, you're up more than 55%. To be sure, UNP, with a P/E of about 16, is not as cheap as it was in March 2009, but upside remains, and I'm Reiterating my Buy rating. Keep in mind that this probably will be the last time to establish a position in UNP and earn an outsized gain in this economic expansion cycle.
The calculation here remains that the railroad rebound has only just begun, due to the U.S./global economic recoveries. The more economically-sensitive, cyclical freight business is just starting to gain steam, and the increased demand should help UNP's pricing, in addition to volumes. Overall, look for revenue to increase 8-10% in 2010 after a double-digit decline in 2009.
The First Call FY2009/FY2010 EPS estimates for UNP are $3.56 to $4.22. That $4.22 FY2010 EPS estimate will likely prove to be low.
Technically, Union Pacific's stock chart is strong – an uptrend, with only one significant breach of the key, 50-day moving average. UNP will encounter psychological resistance at $70, but this should prove to be minor. According to my analysis UNP is headed north.
Finally, the Sell/Stop Loss has been raised to $43 from $27, or to the entry point; hence, this is a zero-risk trade for your March 2009-bought shares.
2010 Outlook: Union Pacific is a long-term play, but if you're looking to sell UNP within the year, take your profits after it rises to $73-74, if it fails to clear $75.
Stock Analysis: Union Pacific is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in UNP now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your UNP position before March 2010. Revised Sell/Stop Loss if you bought shares in this company: $43.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2009/FY2010 EPS estimates for UNP are $3.56 to $4.22. That $4.22 FY2010 EPS estimate will likely prove to be low.
Technically, Union Pacific's stock chart is strong – an uptrend, with only one significant breach of the key, 50-day moving average. UNP will encounter psychological resistance at $70, but this should prove to be minor. According to my analysis UNP is headed north.
Finally, the Sell/Stop Loss has been raised to $43 from $27, or to the entry point; hence, this is a zero-risk trade for your March 2009-bought shares.
2010 Outlook: Union Pacific is a long-term play, but if you're looking to sell UNP within the year, take your profits after it rises to $73-74, if it fails to clear $75.
Stock Analysis: Union Pacific is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in UNP now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your UNP position before March 2010. Revised Sell/Stop Loss if you bought shares in this company: $43.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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