Bipartisan legislation aimed specifically at increasing government regulation of railroads threatens to hamstring 25 years of successful growth and investment by that industry. The Railroad Antitrust Enforcement Act of 2007 (H.R.1650) would effectively undo specific and narrow antitrust process exemptions that were provided for the railroads by the Staggers Rail Act of 1980. The Staggers act effectively halted what had previously been a massive and staggering decline by American railroads. Currently, the railroads are effectively and efficiently regulated by the Surface Transportation Board.

The American Association of Railroads reported in a press release, "Since Staggers, railroads and their customers have benefited enormously. Railroads have reinvested $420 billion back into their systems since 1980. The result has been improved service and safety, and nearly double their traffic volumes -- all while lowering average rates by more than 50 percent in inflation-adjusted terms. That means the average rail [shipping customer] can move twice as much freight today for the same price as in 1980." AAR further reports that a just-released Morgan Stanley survey found customer satisfaction with rail service is at a historical high.

It should also be noted that the devastating decline suffered by the railroads prior to passage of Staggers is arguably the lynch pin of this nation's inability to establish reliable, desirable, and profitable mass transit for commuters by rail. The rate of investment by our freight railroads since 1980 could be one facet in bringing effective local and nationwide passenger rail service back within our grasp. The passage of H.R.1650 may effectively destroy any further hope of developing high-speed, cross-continental passenger rail service and the further expansion of local commuter rail services.

In an age when surface transportation is becoming incredibly more expensive and our airlines are in perilous distress, do we really need to limit our options by passing legislation which could severely injure a system that works? You may wish to consider contacting your legislators in an effort to halt H.R.1650 dead in its tracks.

Can reliable, profitable rail service be saved? originally appeared on BloggingStocks on Sun, 04 May 2008 09:10:00 EST. Please see our terms for use of feeds.

Continue reading Volatile Markets: Checking our stock picks, Week 7

Volatile Markets: Checking our stock picks, Week 7 originally appeared on BloggingStocks on Fri, 05 Oct 2007 16:25:00 EST. Please see our terms for use of feeds.

Continue reading Volatile Markets: Checking our stock picks - Week 6

Volatile Markets: Checking our stock picks - Week 6 originally appeared on BloggingStocks on Fri, 28 Sep 2007 11:55:00 EST. Please see our terms for use of feeds.

Continue reading Volatile Markets: Checking our stock picks - Week 5

Volatile Markets: Checking our stock picks - Week 5 originally appeared on BloggingStocks on Thu, 20 Sep 2007 19:05:00 EST. Please see our terms for use of feeds.

Continue reading Volatile Markets: Checking our stock picks - Week 2

Volatile Markets: Checking our stock picks - Week 2 originally appeared on BloggingStocks on Fri, 31 Aug 2007 16:00:00 EST. Please see our terms for use of feeds.

BloggingStocks recently ran a series of posts called "Stocks for a Volatile Market" in which I argued that shoe maker Steven Madden (NASDAQ: SHOO) was currently priced with much less worthy peers (lower margins, most notably) and loaded with free options and potential catalysts.

While I thought that many of my team's posts made great sense, I take great issue to Sheldon Liber's post on FreightCar America (NASDAQ: RAIL). I have no issues with Sheldon's long term investment record, investing philosophy, or most of his ideas, but I think that this post had several great problems.

Most importantly, Sheldon seemed to purposely neglect considering the future potential of this company by saying that he focuses "not forward projections and guessing, but real facts. It is way too hard to predict the future." But therein lies the entire problem, he neglected the fact that he was looking at an absolute cyclical peak in operations for the company!

He then cited the metrics for the stock (emphasis his): "The P/E is 5.51, the P/S is 0.49, IT HAS ZERO DEBT!, with an ROE and ROI of 87 and an ROA of 47 - that's incredible!"

Continue reading Valuing FreightCar with peak earnings -- a recipe for disappointment

Valuing FreightCar with peak earnings -- a recipe for disappointment originally appeared on BloggingStocks on Fri, 17 Aug 2007 09:50:00 EST. Please see our terms for use of feeds.

Warren Buffett's recently announced investments in railroads have caused many to consider this sector. But with stock prices for rail operators up sharply since the news, investors might want to consider another track to invest in the sector.

Indeed, one advisor who was already riding the rail sector is Elliott Gue, contributing editor to Personal Finance newsletter, who recommends a trio of companies that make and lease railcars.

First up is American Railcar Industries (NSDQ: ARII). Gue notes that deliveries of is railcars soared 32% in the final quarter of 2006, primarily by sales of ethanol tankers.

He adds, "In addition to ethanol demand, there's a strong replacement cycle underway in the tanker car business. Specifically, new government safety requirements are forcing shippers to upgrade and replace their older carriers with safer models."

Continue reading A different track to invest in rails

A different track to invest in rails originally appeared on BloggingStocks on Fri, 13 Apr 2007 12:06:00 EST. Please see our terms for use of feeds.