Genesee & Wyoming Inc (GWR), Kansas City Southern (KSU): These 5 Stocks Made Investors Rich

I expect this stock to continue to perform well in 2013 because I believe its continued enhancement of its rail infrastructure will reduce costs.

Like its competitors, Union Pacific Corporation (NYSE:UNP) is upgrading its railways and expanding its rail network. The company will invest $14 million, building two new tracks for a $3.6 billion unloading terminal near Santa Teresa, N.M. It also plans on building a new $500 million bridge over the Mississippi River to replace an older bridge that causes shipping delays. And in 2012, Union Pacific built six tracks in Odessa, TX.

Union Pacific will soon reap the rewards of its capital expenditures. In Mississippi the new bridge will help decrease shipping time and lower transportation costs. Its focus on efficiency and expanding rail networks paid off in 2012. And will pay off again in 2013.

Canadian National Railway (USA) (NYSE:CNI) is the largest railway in Canada and is the second-largest public rail company by market cap in the U.S.

Since 2009, crude-laden carloads have risen 50-fold. Canadian National Railway (USA) (NYSE:CNI) seized the crude-by-rail movement and has since enjoyed the ride. According to Canadian National, crude by rail revenue was up 300%. If progress on the Keystone Pipeline is any indication, CNI will have years to enjoy the crude-by-rail bonanza – and continue to profit from it.

Not the last stop

The five rail stocks above provided massive gains and likely minted many a new millionaire since the recession. But they may need to “cool off” (particularly KSU and UNP) before buying in again. So on a pullback simply look for a support level to buy into these fundamentally strong companies. As the economy continues to heat up, I expect the rail industry to follow suit. But don’t worry, this isn’t the last stop–you still have time to jump aboard this money train. So buy in, and enjoy the ride.

Article by Santiago Rodriguez, edited by Chris Marasco.  Neither has a position in any stocks mentioned. The Motley Fool recommends Canadian National Railway and Genesee & Wyoming.

The article These 5 Stocks Made Investors Rich originally appeared on Fool.com and is written by Marie Palumbo.

Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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