The rising demand for cost-efficient freight transportation, along with governmental policy support for improving railway infrastructure, should benefit both Union Pacific (UNP) and CSX (CSX). But which of these stocks is a better buy now? Let’s find out.Union Pacific Corporation (NYSE:UNP), which is headquartered in Omaha, Neb., and CSX Corporation (NASDAQ:CSX), in Jacksonville, Fla., are two popular railroad operating companies in the United States. UNP hauls agricultural, automotive, and chemical products and offers long-haul routes from all major West Coast and Gulf Coast ports to Eastern gateways, connects with Canada's rail systems and serves the major gateways to Mexico. CSX provides rail, intermodal, domestic container-shipping, barging, and contract logistics services worldwide, and transports chemicals, minerals, agricultural and food products, and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, and industrial plants, as well as exports coal to deep-water port facilities.
The railroad industry is recovering from its pandemic lows, owing to the gradual easing of COVID-19 restrictions and the resumption of industrial activities. President Biden’s proposed infrastructure spending, which includes a general federal transportation support reauthorization, is expected to be a boon for the railroad industry. The market size of the U.S. rail transportation industry is expected to increase by 9.8% in 2021. So, both UNP and CSX should benefit.
While UNP share price has declined 3.2% year-to-date, CSX has surged marginally. CSX is a clear winner with 14.4% price gains versus UNP’s negative returns in terms of their past year’s performance. But which of these stocks is a better pick now? Let’s find out.