Union Pacific Corp (UNP) is the largest publicly traded railroad company in North America. The company commands an impressive 32,000 miles of rail network in western US.
Railroads are considered a wide moat industry, as it entails immense capital requirements and new entrants in the industry are almost unheard of. Railroads are the pulse of the economy. Whether transporting crude, lumber, merchandise, agricultural or industrial products, railroads are what keeps the economy moving. Railroads are often closely observed by economists and analysts to get a sense of how the overall economy is doing. It is also considered a leading indicator for any recessions or slowdowns.
While crude shipments are on their way to a recovery thanks to the rise in oil prices, coal remains in a secular downtrend – both of which play a crucial part in UNP’s revenue.
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