Stocks The Broader Market Can’t Move Without
There is still a positive undercurrent in the equity market, and it’s evidenced, in part, by particular strength in a number of key stock indices. (See “If This Indicator Turns, the Stock Market’s in Trouble…”) But it’s also apparent in a number of leading stocks—the positions that led the stock market in its 2013 breakout performance.
One of these stocks that continue to be a standout and outperformer is Union Pacific Corporation (NYSE:UNP), an old economy railroad stock that is very much a canary in the coalmine for the U.S. economy.
The railroad business has been exceptionally good the last few years. And if coal shipments have diminished, then oil and fracturing sand have made up the difference and then some.
But for regular freight, business conditions have been pretty decent, according to the railroad companies, and this is material news that rises above the noise. Vehicle shipments have been strong, which has helped a lot.
According to Union Pacific, in spite of what management referred to as significantly weaker coal shipments, volume growth and pricing gains in regular freight produced a record fourth-quarter operating ratio (a measure of profitability) of 65%.
The company reported that its fourth-quarter operating revenues grew seven percent to $5.6 billion, up from $5.25 billion in the same quarter of 2012. Management said that volume growth from agriculture, automotive, intermodal shipments, and industrial products more than offset declines in coal and chemicals.
Agriculture volume was up 19% comparatively, followed by a 17% gain in automotive shipments, and a 14% gain in the volume of industrial products. Union Pacific’s stock chart is feature below:
Chart courtesy of www.StockCharts.com
Most railroad stocks have been doing exceptionally well, partially because of the broader market’s reflation, but also because of their own financial performances.