Readers of this space know that the railroad sector is one of the preferred sectors. After decades of unconscionable neglect, U.S. railroads are experiencing a resurgence, driven by international trade, commodities transport, and the rail's cost advantage over truck transport.

Further, the revival of the rails is not exclusive to one nation in North America. Canada also is seeing a healthy growth in railroad services and Canadian Pacific (NYSE: CP) is worth a review.

Analysts see 4-6% revenue growth for CP in 2008, in Canadian dollars, with grain, fertilizer and oil sands related shipment gains offsetting declines in forest products.

Another positive: analysts also expect CP to continue to improve rail system efficiency and fluidity, will overall better asset utilization

Readers of this space know that one of my preferred sectors is the railroad sector. The growth in international trade, the importance of commodity transport, and record-high oil prices mean the rails will play a central role in the nation's economy. And a railroad stock worth owning is CSX Corp.

CSX Corp (NYSE: CSX) operates the largest rail network in the eastern United States, with a 22,000-mile rail network in 23 states and two Canadian provinces.

In general, analysts see 9-12% revenue growth for both 2008 and 2009, with continued pricing power (including expired contract re-pricings) and improved asset utilization.

Further, coal traffic should rebound in 2008, while intermodal traffic is expect to remain solid, even with a slowdown in the building materials and automotive businesses.

Also, several infrastructure improvements and capacity increases should improve CSX's delivery times and reduce dwell times. The Reuters F2008/F2009 EPS consensus estimates for CSX are $3.60/$4.23.

Currently trading around $68 with a p/e of 226, CSX is not cheap. But the view here is that the 3-5 year outlook is promising for this major rail line; moreover, the likelihood of persistently-high oil prices means more businesses will switch to rail transport for goods.

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.

When a major, metropolitan U.S. newspaper discovers a investment trend or a hot sector, count on increased share demand for companies in the sector. When that paper is one of the top three dailies, in this case The Washington Post, count on even more demand.

On Monday, The Washington Post examined the resurgence of the United States' railroad sector, touching on many of the themes discussed here during the past six months, and described why the rails' services are likely to be in demand for many years.

For nearly 30 years, the rails, long neglected in the United States, were considered passé. Then the globalization era dawned, with its exports and demand for commodities. Add a price of oil that's basically risen for 10 years and the results is: the rails are back. And with the above in mind, Burlington Northern (NYSE: BNI) is worth an evaluation.

With 32,000 miles of track in the western U.S. and two Canadian provinces, Burlington Northern accounts for about 45% of the west's traffic and about 23% of U.S. rail traffic.

Analysts see 2008 revenue growth of about 6-8%, down from double-digit growth a year earlier, but still healthy. Margins should remain solid, with modest pricing power. The Reuters F2008/F2009 EPS consensus estimates for BNI are $5.92/$6.81.

Even better: like the three other major U.S. railroads, BNI is in a relative sweet spot until the United States determines its energy policy for the 21st century. Or should one say 'if the United States determines its energy policy for the 21st century.' Investors will carefully note that the value Wall Street attaches to rail stocks pretty much mirrors the price of oil's ascent, due to the higher truck transportation costs implied by a higher price of oil.