3. Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Investors: 93
One of the Best Transportation Stocks, Union Pacific Corporation (NYSE:UNP) is a rail freight transportation firm. It has a large railroad network over 23 states, and it is actively growing its mainline and terminal capacity by building new sidings and extending old ones. These projects are especially critical in high-growth areas like the Pacific Northwest, where modifications are being made to enable growing exports of soda ash and grain. In the Southwest, attempts are being made to improve intermodal services. In addition, the company is implementing new technology like GPS tracking for containers and rail pulse systems to boost service reliability, provide real-time tracking, and improve customer communication.
The stock has surged by more than 7% so far in 2025. Union Pacific Corporation (NYSE:UNP) had a 5% rise in revenue carloads, which contributed to improved financial results in Q4 2024. Despite a 70-basis-point setback due to the ratification of a crew staffing agreement, its operating ratio grew to 58.7%, representing a 220-basis-point improvement. The operating income rose by 5% to $2.5 billion. Furthermore, management is confident about 2025, with a $4.5 billion share repurchase plan and a capex target of $3.4 billion.
Bernstein analyst David Vernon boosted Union Pacific Corporation’s (NYSE:UNP) price target to $284 from $277, maintaining an Outperform rating on the stock. According to the firm, railroads have transitioned from a consensus-long sector to a very boring group, dragged down by sluggish demand and battling with cost pressure and margin erosion. Bernstein believes that “we are moving past the worst of times.”
Bretton Fund stated the following regarding Union Pacific Corporation (NYSE:UNP) in its Q4 2024 investor letter:
“The main detractor was Dream Finders, taking 1.5% off the fund, and Union Pacific Corporation (NYSE:UNP) was a minor detractor with a -0.2% impact. The rail industry has seen tepid revenue growth the past few years as higher-revenue coal volume declines and is replaced by lower-revenue intermodal volume sourced from ocean and truck carriers. Despite the growth challenge, Union Pacific managed to cut costs and grow earnings per share by 6%. The stock returned -5%.”
