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Tue, May 13, 2025, 7:05 AM 2 min read
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We came across a bullish thesis on Union Pacific Corporation (UNP) on Substack by Peter Thomason. In this article, we will summarize the bulls’ thesis on UNP. Union Pacific Corporation (UNP)'s share was trading at $216.84 as of May 8th. UNP’s trailing and forward P/E were 19.54 and 18.55 respectively according to Yahoo Finance.
A slow moving freight train, revealing the importance of railway equipment.
Union Pacific Corp represents a long-term, resilient investment opportunity rooted in the structural advantages of the railroad industry. Railroads offer the most cost-effective and carbon-efficient means of transporting goods over long distances, especially when compared to trucks and airplanes. While large cargo ships are cheaper, their use is limited to water-accessible routes, leaving railroads as the most viable and indispensable inland freight solution. The North American rail market is an oligopoly dominated by just seven major players across the U.S., Mexico, and Canada. Once a railroad operator establishes its extensive network of tracks, it essentially secures a monopoly over the transportation corridors it serves. This creates significant barriers to entry, as it is economically irrational for competitors to build parallel infrastructure due to the risk of overcapacity and mutually damaging price wars. Regulatory hurdles and the immense capital required to scale further deter new entrants. As a result, Union Pacific and its peers operate in a protected environment with durable pricing power and dependable cash flows. Although the returns on capital are solid rather than spectacular, the predictable nature of the business, limited competition, and high operational leverage ensure Union Pacific remains a vital and attractive investment for the long haul.
Union Pacific Corporation (UNP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 93 hedge fund portfolios held UNP at the end of the fourth quarter which was 78 in the previous quarter. While we acknowledge the risk and potential of UNP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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