It's time for investors who can tolerate moderate risk to get on board railroad Kansas City Southern (NYSE: KSU), and why not? The nation's inadequate, congested interstate highway system and vehicle system dependent on oil suggests a bottle-neck plagued, high-cost road transportation system in the years ahead.

Hence, I'm reiterating my Buy rating for Kansas City Southern, first recommended on July 29, 2009, at a price of $19.66. If you bought KSU in July, you're up 39%.

It goes without saying that I favor the railroad sector. And why not? The nation's inadequate, congested interstate highway system and vehicle transportation system dependent on oil suggests a bottle-neck plagued, high-cost road transportation network in the years ahead.

That opens the door for a resurgence of the rails, and Kansas City Southern (NYSE: KSU) is part of that fortunate circle. Kansas City Southern has operations in the U.S. (56% of FY2008 revenue) and Mexico (44% of FY2008 revenue), including 6,000 miles of track.

"Having spent a lot of time recently studying the North American transportation industry, my conclusion is that trucking is on the decline while the railroads are poised to increase market share," notes Tom Slee.

The contributing editor to Gordon Pape's Internet Wealth Builder states, "The logical conclusion: buy rail stocks now." Here he looks at Kansas City Southern (NYSE: KSU) and Burlington Northern Santa Fe (NYSE: BNI).

"Who would have thought it? Railways are having a good year. They were supposed to be hunkered down, riding out the recession. Instead, the old iron horse is thriving.

"Surging demand for commodities is more than offsetting a slump in building materials shipments. Even higher energy costs are proving a plus for the railroads. Each jump in oil prices gives them a bigger edge over their gas guzzling competitors: trucks.

"Most important, the rails are able to raise rates despite the economic downturn. Their surcharges are sticking. Yet the stocks are out of favour.

MOST NOTEWORTHY: Motorola Inc (MOT), Maguire Properties Inc (MPG), China Life Insurance Co Ltd (LFC) and Palm, Inc (PALM) were some of today's most notable downgrades:

• Lehman Bros downgraded shares of Motorola Inc (NYSE: MOT) to Equal Weight from Overweight with a $20 target citing a slower recovery in handset margins.

• Stifel downgraded Maguire Properties Inc (NYSE: MPG) to Sell from Hold. Friedman Billings removed Maguire from its Top Picks list, citing the $2.9 billion acquisition of California assets for the removal.

• Bear Stearns downgraded China Life Insurance Co Ltd (NYSE: LFC) to Underperform from Peer Perform based on valuation.

• ThinkEquity cut Palm, Inc (NASDAQ: PALM) to Accumulate from Buy with an $18 target citing valuation driven by takeover speculation as well as lack of execution improvements.

OTHER DOWNGRADES:

• UBS downgraded shares of both CSX Corp (NYSE: CSX) and Kansas City Southern (NYSE: KSU) to Neutral from Buy on valuation. The broker raised CSX's target to $45 from $41 and raised Kansas City's target to $38 from $33.

• AG Edwards downgraded Qualcomm, Inc (NASDAQ: QCOM) to Hold from Buy on valuation.

• Lehman downgraded Hasbro Inc (NYSE: HAS) to Equal Weight from Overweight with a $30 target.

• Matrix USA downgraded KB Home (NYSE: KBH) to Hold from Strong Buy based on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).