April 09, 2007
Transports Are Hot
News has come out recently that Berkshire Hathaway, the company run by billionaire investing titan Warren Buffet, has picked up millions of shares in Burlington Northern, a large rail company. Berkshire has also said that it has picked up stakes in other rail companies.
Heavy transport industries, like rail and ocean shipping, is a very attractive option because in many cases it can save a lot of money or, in the case of shipping, is the only option.
Two good plays here are General Maritime and Guangshen Railway Co. Ltd.
General Maritime (GMR) is a fantastic company that operates oil tankers. As demand has increased for oil globally, there has been a big need for increased transport. GMR is running at full capacity because of this. They want to grow their fleet, and are looking for new ships to buy, but new ships will not be on the market until 2009. This indicates that the company has positive prospects far into the future. Oh, and did I mention there is an 8% dividend?
Guangshen Railway Co. Ltd. (GSH) is a Chinese rail company. GSH operates freight and commuter rail lines all over China and are mostly state owned. The state owned nature of this company suggests that it will be highly stable going forward. GSH could be huge, too. It is far less difficult to lay more rail than to create super highways. In the US, much shipping is done by truck because of the massive road network that we have, but China is not thus blessed. Rail is a great way to ship, and being state owned will help their prospects.
Transports are going to be big as international and intercontinental trade increases. Hopefully these to stocks can make you some money.
Posted by jkill at April 9, 2007 12:32 PM