Union Pacific.
Ding-Ding Ding - the sound of the closing train gates makes you stop the car. Moments later , you hear it - Whooossh! A train blew right past you. A thought races through your head - who is exactly the owner of this? And can I invest in it? A journey into one of the strongest monopolies has only just begun. Buckle up! :)
I chose Union Pacific specifically for this analysis, as they have one of the largest segments of the railroads in USA.
Stock Information
Union Pacific is the owner of 51,507.68 km (32,000 miles) of railroads in the USA. It provides transport services for products like wheat, coal, industrial materials, among many others. It also has to make sure its tracks and bridges stay in the best condition. Yeah, I know, pretty boring, right? Here is a map, to make sure you don’t fall asleep:
It shows UNP as having a really interesting position, as it owns railways that are criss-crossing in different parts of the country, meaning a broader distance is covered.
So, we can conclude that:
Railroads offer a transportation option, which as said on UNP’s website is more carbon neutral.
Regulators won’t touch this company, as it’s a business, which broken up could be in danger of going into disrepair.
The railroad industry isn’t going anywhere.
Revenue growth
A company with good revenue growth is what makes investors happy, with expanding operations, and great financial health, let’s see if UNP fits into this assumption:
Unfortunetely, it doesn’t show the best revenue growth, and can be a bit volatile at times. Let’s not get deterred from finding out about this company…
Financial Health
A company with a great balance sheet is exactly what I’m looking for. Duolingo, Visa, Adobe, are all examples of companies with some of the best balance sheets ever. But is UNP also one of them?
Well, we can see that this company has a healthy balance sheet indeed!
A clue that will lead us to another clue. The shareholder yield! A treasure hunter’s ultimate goal right? :)
Shareholder Yield
A company which is returning cash back to shareholders is a sign that they think we, as investors can allocate it in a better way, that is usually a sign of not having the best ideas to invest, although not always, as we have Google, which is paying dividends, AND growing! But is UNP a good company to own for dividends? Click the interactive image below to find out!
Not the best metrics, but it’s good they pay you some dividends, right?
Valuation
Conclusion
Will I buy it now? No. Why? I think there are better opportunities elsewhere. Uber, Adobe, Intuit, and ASML are all great buys at the moment, but if you’re looking for a company which isn’t easily disrupted, then UNP is the way to go! Thank you for reading this article and let me know if you have any ideas for this newsletter! :)
PS. I recently started a youtube channel with funny investing videos: https://youtube.com/@monopolisticinvestor?si=FFWIK4b8ZgjebNQW Check it out! 😀