(The Associated Press circulated the following article on June 16.)
NEW YORK — Shares of railroad companies moved higher again Thursday on positive outlooks from industry executives and broader gains on the Dow and Nasdaq.
The Dow Jones industrial surged more than 198 points, or 1.83 percent, to close at 11,014.95. The Nasdaq composite index gained 58.15, or 2.79 percent, to finish at 2,144.15.
Major railroad stocks continued their resurgence after a sharp pullback in recent weeks. Bulington Northern Santa Fe Inc. led all gainers in rising $4.41, or 6 percent, to close at $77.72 on the New York Stock Exchange.
CSX Corp. rallied $2.92, or 4.7 percent, to $64.79 on the NYSE, while Canadian Pacific Railway Ltd. closed up $1.23, or 2.6 percent, to $48.97. Union Pacific, the nation’s largest railroad, added $2.59, or 3 percent, to finish at $90.81 on the Big Board.
At a conference in New York on Thursday, company executives affirmed the bullish outlooks analysts offered earlier in the week.
“We see an alignment of the stars ahead for CSX,” said Chief Executive Michael Ward.
Ward expects earnings per share growth of 12 percent to 14 percent in the long term. He sees pricing increases of 5 percent to 6 percent in 2006 and 2007.
Ward pointed to an excellent pricing environment in automobiles, where CSX is also getting volume boosts from new domestics like Toyota, Honda and Hyundai.
Nontraditional areas like ethanol and waste are also growing, and he said CSX’s share of the fast-growing intermodal business should be competitive with its rivals later this year.
“We’ve tried to become more efficient by shedding less profitable elements of that business and are now poised to join the growth,” he said.
CSX also received good news on Thursday from the federal government, which scrapped plans to move a CSX rail line in Mississippi as part of its Katrina rebuilding. CSX had already repaired the line. A spokesman for the company declined to speculate on the impact a government-funded relocation might have, but did say CSX was prepared to move the traffic elsewhere.
Also at the conference, Brian Grassby, chief financial officer at Canadian Pacific, said, “We’re bullish on the medium and long term.”
Grassby said the company’s volumes of potash, or fertilizer, should grow significantly in coming years as demand increases from developing countries like China.
In the near term, Grassby said he expects a bumper wheat crop in Canada and said the company should also benefit from additional capacity on its Western network. The expansion currently adds the equivalent of up to two trains per day, he said.
Oil out of the rich Alberta sands is driving Canadian Pacific’s industrial volumes.
Elsewhere in the sector, Norfolk Southern Corp. gained $1.07, or 2.2 percent, to close at $50.82 on the NYSE, while Canadian National Railway Co. rose $1.22, or 2.9 percent, to close at $43.16.