How to Play the Roads, Rails and Seas

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Oct. 23 (Bloomberg) -- Cowen & Co.'s Jason Seidl and Clarkson Capital Markets' Urs Dur discuss what to watch for in the transportation industry with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Maritime equity analyst at cowen & co.

And we have jason seidl.

Start up with the railroads.

What was the report like and what does it tell you about the economy?

Norfolk beat us on the margin side.

They were able to bring it to the bottom line.

People were underestimating their ability to convert a lot of the intermodal business they had down to the profit line.

This is very low business by investors.

What people were missing is that they are putting this additional stuff on additional train.

Norfolk southern, intermodal, explain the connection.

What it looks like is a box that they put on a rail car.

This is the use of two modes of transports to haul to forms of items.

On the other side, we assume it is not lan lines on both sides.

-- it is not landlocked on both sides.

This is also shipping that contains containers.

They are probably oversubscribed right now.

-- oversupplied right now.

Worldwide demand is about five percent this year.

Probably the best way to be involved, some old friends of ours.

Do you like this thought?

Yes, absolutely.

We have the 25 target.

We did try to come to market recently and they pulled the deal because they did not like the pricing.

They have been growing the company pretty aggressively and the dividend is going up in the first quarter next year, probably 5% or 10%. should people be buying railroads stocks?

Warren buffett has burlington northern, santa fe.

This is something that people should be looking at?

They have had pricing power over the last 10 years.

It will have pricing power for the next 12 months and beyond.

When i look at this space, i see their eec comparables in the fourth quarter.

Last year, it was down 15%. i think the railroads will look pretty strong in the report in early january.

Are there any segments of the shipping industry that will look as reasonably well priced as jason is describing in terms of the railroads?

Let's talk about dry bulk shipping.

The dry index has moved up on rates going from brazil to china with iron ore which looks a bit like a head fake.

This is not really a broad-based recovery.

They will probably weaken into the first quarter as the forward market shows it will be weaker and then it is probably an opportunity to get involved with companies or the partnerships that have dry bulk.

That is iron ore, grain.

What about other areas of the industry?

Tankers, you'll want to take a look at companies such as the ones moving, lpg.

The smaller ship size.

The lpg carrier.

This is below net asset value.

The earnings are due out soon.

It will probably be a soft third-quarter.

It is probably a solid buying opportunity.

We would take a look at the ticker sector, broadmoor shipping.

Also a refined product tanker.

Trading below net asset value, demand exceeding supply.

When i think of product tanker is i think of goes into the gas tank of trucks for example.

Are there any trucking companies that we need to be paying attention to?

We split the trucking world up.

We have talked about truckload and lesson truckload.

There is some regulation that kick in in july.

They are at capacity.

The rates have been subpar.

They have been at about 1.5%. there is only the top 10 guys covering about 80% of the marketplace.

They have had a lot more pricing power than their truckload brethren.

Why is that?

They collude on the way up and they collude on the way down.

They had good momentum.

Trashing pricing is the way to trash your earnings.

They have been able to grow their earnings.

I look at our two favorites.

Is there anything we left out?

They drill ships to.

He talked about some of the split offs.

I don't really cover the drillers.

You really want to take an opportunity to look at companies that do trade below net asset value or others that might dip below in the markets caps off such as the dry bulk markets.

You want to look at that entire space.

Certainly like many companies, they are the strong picks right now.

Why is it refined products doing so well?

Part of this is the boom in u.s. shell gas exports.

The rising tide lifts all boats.

This text has been automatically generated. It may not be 100% accurate.


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