In this article, we will take a look at 10 Best Railroad Stocks To Buy According To Billionaires.
The trade war initiated by President Trump will force freight railroads to position themselves for the chain reaction. Tariffs on Mexico, Canada, China, and Europe will set in and shake up the trade network. In 2024 alone, American railroads moved $203.1 billion worth of goods across the Canadian and Mexican borders. The rail sector remains a vital economic engine, generating $233.4 billion in output and supporting approximately 750,000 jobs in 2023. At the same time, railroads also demonstrated their commitment to long-term growth by reinvesting $26.8 billion into infrastructure last year.
While much of the attention has been on autos and consumer goods, chemicals are a critical piece of the puzzle. The United States exported over $28 billion in chemicals to Canada last year and imported around $25 billion, making Canada the top supplier of chemical imports. Canada also plays a strategic role in the US critical minerals supply chains, EV battery production, and energy imports, including crude oil, natural gas, and electricity. Industry experts warn that new tariffs could drive up costs across sectors, from chemicals used in drinking water treatment to construction materials like lumber, creating potential inflationary pressure.
Despite the risks, Wall Street remains cautiously optimistic. Analysts believe the supply chain could adapt, especially for goods like lumber that already face steep tariffs. Early signs suggest the administration is moving deliberately, giving companies time to adjust strategies. Railroads and freight remain central players, particularly with Mexico’s auto exports, 70% of which move by rail, and chemicals are heavily reliant on cross-border logistics. Longer term, a trade war could test the strength of USMCA relationships and ripple across North American supply chains, but for now, businesses are preparing while the administration signals a phased approach.
In November 2024, Joe Hinrichs, CEO of a leading US rail company, shared an insight with CNBC’s Jim Cramer that still holds true today:
“From our standpoint, actually, as long as it’s coming to the U.S., we’re going to move it somewhere. If tariffs change the trade portfolio — as long as the economy’s growing, we’ll be a part of it.”
Warren Buffett is a major investor in the railroad industry and has commented that the railroad industry, including BNSF, is a “better business now” than it was in the past. With that outlook in mind, let’s take a look at some of the best railroad stocks that billionaires are piling into.
Our Methodology
For this article, we focused on making a list of all railroad and railcar stocks publicly listed in the United States. Using Insider Monkey’s Q4 2024 database, we examined billionaire sentiment for each stock and selected the 10 most popular ones. The stocks are ranked in ascending order based on the number of billionaire investors as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. L.B. Foster Company (NASDAQ:FSTR)
Number of Billionaire Investors: 4
Stake Value of Billionaire Holdings: $36,454,396
L.B. Foster Company (NASDAQ:FSTR), founded in 1902 and based in Pittsburgh, Pennsylvania, offers engineered products and services for infrastructure in the United States, Canada, the United Kingdom, and internationally. The company provides rail products, monitoring systems, and aftermarket services, in addition to producing precast concrete products for parks, sound walls, bridge components, and custom concrete items. FSTR is one of the best railroad stocks to invest in.
In 2024, L.B. Foster Company (NASDAQ:FSTR) experienced strong cash flow and improved profitability, particularly in its Rail segment, which saw a 14.2% growth in sales and a 300 basis point increase in margins. However, the Infrastructure Solutions segment struggled, with sales dropping 25.2% due to lower pipeline coating volumes. Due to cost-saving measures, including a restructuring program, operating expenses were cut down, and FSTR was able to reduce debt and buy back shares, repurchasing about 300,000 shares in total. For 2025, the company has authorized a new $40 million share repurchase program.
According to Insider Monkey’s fourth quarter database, 4 billionaires were bullish on L.B. Foster Company (NASDAQ:FSTR). Billionaire Mario Gabelli’s GAMCO Investors was the leading stakeholder of the company, with 934,200 shares worth over $25 million.
9. GATX Corporation (NYSE:GATX)
Number of Billionaire Investors: 6
Stake Value of Billionaire Holdings: $221,505,093
GATX Corporation (NYSE:GATX) operates as a leading railcar leasing firm with a diverse fleet of railcars, locomotives, aircraft spare engines, and tank containers. The company operates across three key segments – Rail North America, Rail International, and Engine Leasing. GATX provides leasing services to industries such as petroleum, chemicals, food, and transportation. It ranks 9th on our list of the best railroad stocks to buy.
On April 23, the company reported financial results for the first quarter of 2025. GATX Corporation (NYSE:GATX) reported a net income of $78.6 million, up from $74.3 million in the same quarter last year. Fleet demand stayed strong across the board. In North America, railcar utilization hit an impressive 99.2%, and lease renewals held steady with an 85.1% success rate. The company also made over $30 million from selling railcars in the secondary market. Despite uncertainty in the broader economy, leadership remains optimistic, maintaining a full-year earnings forecast of $8.30 to $8.70 per share
GATX Corporation (NYSE:GATX) declared a $0.61 per share quarterly dividend on April 25. The dividend is payable on June 30, to shareholders on record as of June 13. The company has consistently paid dividends since 1919.
According to Insider Monkey’s Q4 2024 database, 6 billionaires held stakes in GATX Corporation (NYSE:GATX). Billionaire Israel Englander’s Millennium Management was a prominent position holder in the company, with 37,442 shares worth $5.80 million.