Which Railroad Stock is the Better Buy: CSX or Canadian Pacific?

(C) Reuters. Which Railroad Stock is the Better Buy: CSX or Canadian Pacific?

Rising demand for cost-efficient transportation amid supply chain disruptions, and increasing government investments to improve rail infrastructure, should drive the railroad industry’s growth. Therefore, we think prominent players in this space, CSX (CSX) and Canadian Pacific Railway (NYSE:CP), should benefit. But which of these stocks is a better buy now? Read more to find out.CSX Corporation (NASDAQ:CSX) in Jacksonville, Fla., and Canadian Pacific Railway Limited (CP), which is headquartered in Calgary, Canada, are two prominent players in the railroad industry. CSX provides rail, intermodal, domestic container shipping, barging, and contract logistics services worldwide. It transports chemicals, minerals, agricultural and food products, coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, industrial plants, and exports coal to deep-water port facilities. CP is a Class 1 transcontinental railway that provides freight and intermodal services over a network in Canada and the United States. It transports bulk commodities, merchandise freight, and intermodal traffic that comprises retail goods in overseas containers.

The gradual easing of COVID-19 restrictions and the resumption of economic and industrial activities have helped the railroad industry recover from its pandemic lows. Because the demand for transportation remains high amid current supply chain disruptions and rising oil prices, fuel-efficient rail and intermodal services should gain importance. Moreover, increasing investments to improve rail infrastructure bodes well for the industry. The global rail market is expected to grow at a 4.5% CAGR to $820 million in 2024. So, both CSX and CP are expected to benefit.

While CP’s shares have gained 3.6% in price over the past three months, CSX surged 8.5%. CSX is a clear winner with 23.3% gains versus CP’s 10.4% returns in terms of their past nine months’ performance. But which of these stocks is a better pick now? Let’s find out.

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