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U.S. Rail Stocks Seen Up 20% This Year Even as Cargo Stays Weak

  • Prices to rebound as efficiency climbs, according to analysts
  • Carloads tumbled 2.5% in 2015 for biggest drop in six years

U.S. railroad cargo in 2015 dropped the most in six years, and 2016 isn’t expected to be any better. Yet the carriers’ shares are poised for a rebound from their worst performance in at least 25 years.

Union Pacific Corp., CSX Corp. and Kansas City Southern each are expected to rise more than 20 percent this year, according to the average of analysts’ target prices compiled by Bloomberg. Norfolk Southern Corp. trails the field with an expected 11 percent return but that’s largely because its stock already was boosted by a takeover campaign from Canadian Pacific Railway Ltd. that began in November.