Most transportation officials agree that the United States' transportation infrastructure - - highways, roads, bridges, mass transit systems - - is in need of a major upgrade in order to meet the nation's transportation needs of the 21st century.

The nation's public officials will begin to address the above concern in the years ahead, as public funds become available, but until they do, and due to crude oil's sustained high price, an opportunity has emerged for another transportation form: you guessed it, the railroads. And Norfolk Southern Corp. (NYSE: NSC) is a railroad worth a review.

Norfolk Southern provides rail transportation in the eastern U.S. and Canada, operating a 21,000-mile rail network. It's an elaborate intermodal and coal service network that also has a large freight business.

To say the bears on Wall Street have gained some momentum in late November 2007 would be an understatement.

The consensus now argues that U.S. GDP growth has slowed substantially, with growth likely to remain sub-par through at least June 2008, and the Dow's 1,400-point drop in about a month reflecting that consensus.

Nearly every sector looks vulnerable. Still, some sectors are faring reasonably well. The rails are one, and among the rails, Burlington Northern (NYSE: BNI) is worth an evaluation.

For nearly 30 years, the rails -- long neglected in the United States -- were considered passé. Then the globalization era dawned, along with its exports and demand for agricultural products and coal. Add intermodal shipments and a price of oil that's basically risen for ten years and the results is - the rails are back.

Over the past year, transportation stocks have lagged other shares. Since last October, for example, the Dow Jones Transportation Index has lost 5.1%, while the S&P 500 index has gained 13.25%.

But not all stocks in the transport group have tracked the index. Railroad shares, for example, have outperformed both the sector and the overall market, with the S&P Supercomposite Railroad Index (a sub-index of the S&P Composite 1,500 index) rising by 17.3% over the period. That compares to, say, the S&P Supercomposite Trucking Index, which has dropped by 6.6%

Among the reasons for the relative strength in railroad shares: interest from value investors like Warren Buffett, and the fact that rising oil prices don't hurt this segment as much as other, more fuel-dependent industries.

Still, some might argue that at this point, much of the news, whether good or bad, is probably factored into prices. If you combine that with the fact that the railroad sector is back to long-term resistance levels relative to its trucking company counterpart, that suggests it might be a good idea to sell the former and buy the latter.

Otherwise, given a worrisome economic outlook and the relative underperformance of the transportation sector generally, it could be time for those who've been riding the rails to jump off the train -- before it runs out of track.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

Given investors anxiousness about the economy and hearing more gloom and doom than I think is warranted, I thought I would get back to basics with "my pal" Warren, and add to the series I started several months ago. I decided to write the series after receiving encouragement from friends and associates that read With Warren Buffett by my side ....

Today, I am writing about the concept of Durable Competitive Advantage, which is the ability to get ahead and stay ahead with a high level of certainty. It is also referred to as Sustainable Competitive Advantage.

To achieve a Durable Competitive Advantage, several factors have to be present. One is a big moat (Buffett expression) surrounding the enterprise. This usually means businesses that sell commodities where price is the primary factor in determining opportunity, have no moat as price takers. Their profit margins are not easily defendable. Another factor is barrier to entry. How easy would it be for someone to enter the same business and compete? The T-shirt business is a good example, of something without a Durable Competitive Advantage. Anyone could enter this business in one day, and they do. So unless the business has some unique concept, it does not have the promise of relatively predictable and sustainable profit margins in the future.

Large investors such as Warren Buffett and Carl Icahn, as well as hedge funds, have invested more than $8 billion in railroad stocks, calculating that strong business conditions for the rails will continue. But are they on the mark or late to the railroad party?

After a solid performance in 2006, Burlington Northern Santa Fe (NYSE: BNI), Union Pacific (NYSE: UNP) and Norfolk Southern (NYSE: NSC), are part of a sector that has gained 20% this year, despite a modest decline in traffic volumes (about 4%), to date.

The modest traffic dip - attributable primarily to the sluggish conditions in certain U.S. economic sectors - is not insignificant, analysts say. Still there are several long-term secular trends that suggest that the rail's recent strong run is far from over.

First, U.S. imports/exports remain strong: rails play a large role in transporting goods from and to coastal ports. Energy costs are driving part of this traffic increase: as diesel and gasoline prices rise, rail transport becomes a better transport value for many businesses/customers.

Second, commodity demand -- particularly in emerging-market and recently-developed countries -- is strong, and is expected to remain solid in 2007 and 2008, as the global economy continues to expand at a greater than 4% rate.

Further, the major U.S. rails are the survivors -- winners, really -- of a sector that scaled down and decreased the number of providers in the 1970s and 1980s. Translation: the rails
have a pricing power advantage with regard to many contracts and clients.

In Thursday afternoon trading, Burlington Northern gained 74 cents to $87.87, Union Pacific rose $1.06 to $118.81, and Norfolk Southern climbed 74 cents to $55.31.

To be sure, if the U.S. economy dips into a recession, or if the global economy slows dramatically, the investments by Buffett, Icahn, etc., would then look like riskier ventures, but so long as the secular trends remain in place, their calculation appears to be prudent, to say the least.

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."

All I can say is if you want to improve at something seek out the best advice you can get and try to follow it. If I was studying golf and Tiger Woods was willing to coach me, that would be the best opportunity I could hope for. If I wanted to improve my jump shot and Kobe Bryant had some spare time to work with me, that would be fantastic.

Well, guess what, if you are an investor there is a wealth of information available, and you can learn from the best. The best is Warren Buffett and you should do what he does. That is what I have been trying to do. I have been discussing Buffett in many of my stories and reminding people that he is the master and if you are doing anything else you are missing the point. Sure Smush Parker is also a starting guard for the Los Angeles Lakers, and that is amazing because the odds of being a starting guard in the NBA are astronomically small, but I would rather learn from Kobe.

So you can quote anybody you want and search far and wide for opportunities, but if you consider yourself a shrewd investor and are not studying Buffett you are making a mistake.

In late December, Avista Capital Partners agreed to pay $530 million for the Star Tribune, less than half of what McClatchy paid for it in 1998. The deal comes amid growing concerns about the future of newspapers, which are facing competition from the Internet. But in spite of the ugly long-term outlook for newspapers, they may make an interesting investment for now.

For starters, Avista is purchasing the newspaper for 6.5 times its cash flow. Newspapers don't have the large capital expenditure requirements that many more booming businesses do. The industry is in decline, but it's still making money. I'm reminded of a profound statistic that I first read about in Jeremy Siegel's book The Future for Investors: Since 1957, railroad stocks have outperformed airlines, trucking, and the S&P 500.

This is of course not attributable to dramatic growth in the railroad industry. Rather, most investors saw that the companies were in decline and the share prices were driven down, and then provided a good return. The moral of the story: valuation matters. Most stocks are a good deal at the right price.

Are newspapers the new railroads? There are numerous similarities. Railroads were replaced by airplanes and trucks, but the railroad stocks were the better investment. Newspapers are being replaced by the Internet, but that in no way means that Internet stocks are better buys. Here's a quick look at some of the bigger newspaper stocks:

• Gannett (NYSE:GCI): Owner of 91 daily newspapers, including USA Today. The also own around 1,000 non-daily publications. Trades at around 11 times cash flow.
• E.W. Scripps (NYSE:SSP): Owns some newspapers, but also television stations, including HGTV and the Food Network. Also owns Shopzilla.
• Tribune (NYSE:TRB): Trades at around 8 time cash flow. Owns 11 daily newspapers, the Chicago Cubs, television stations, and other media interests.