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The division of Conrail between CSX Corp and Norfolk Southern Corp has been approved by the US Surface Transportation Board and is planned to close in late Aug 1998. However, labor agreement finalization and debt financing for the purchase will delay bottom-line results. Union Pacific Corp is forecast to post its 3rd consecutive quarterly loss due to its service problems. These stocks are best only long-term investors who can tolerate risk.

Consolidation in the railroad industry has been continuing in 1998, but many of the mergers have resulted in poorer safety and service records on the part of many of the new combinations. There has also been rail gridlock in the Western states, and some shippers have been hurt by this. These stocks have been volatile in the late 1990s' and only those investors who can tolerate risk over the long term should consider them.

Merger activity in the railroad industry is causing concern for safety, ontime delivery and capacity. These delays are affecting the US economy in a significant way. Each railroad stock offers unique investment properties and investors must review them carefully. Price stability and high dividends are the properties that conservative investors should look for when purchasing railroad stocks.

Consolidation has continued to be a major trend within the railroad industry during the 1990s, even with some of the short-term safety and congestion problems involved. Railroad privatization in Mexico is also expected to have an impact on US rail carriers, as well. Grain carload volume has increased in 1997, and will in the future, but auto and coal volume has been reduced. Several railroad stocks may be rewarding for risk-tolerant investors.

The consolidation within the railroad industry are coming to an end which makes the industry a good long term investment option. International expansion is also expected to have a beneficial effect upon the industry. Earnings will increase through 2000-2002. Mexico is privatizing its railroad system and the CSX/Norfolk Southern acquisition of Conrail is before the Surface Transportation Board.

Consolidation is continuing in the railroad industry with 14 proposed mergers in 1995 and 1996. This trend is likely to continue on a smaller scale in 1996 and 1997, with the aims of efficiency and market share gains. Freight volume for 1996 is rising, and intermodal loads will increase during the second half of 1996 with an improved economy and higher trucking rates. These stocks are expected to outperform the market in 1996 and 1997.

Railroad traffic is expected to rise through the remaining months of 1996 to make up for a mild drop in the first quarter, and the industry as a whole should perform above-average during the year. Potential investors should be aware of a flurry of consolidations, exemplified by the merger of Illinois Central and CCP Holdings Inc and Wisconsin Central's acquisition of Rail Express Systems. Most industry stocks also should appreciate out to 1999-2001.

Consolidation is rampant in the railroad industry in 1994 and 1995. Union Pacific Corp has merged with Chicago & Northwestern and Southern Pacific, Wisconsin Central has purchased Algoma Central, and the Santa Fe Pacific merger with Burlington Northern is closing. The merger attempts of Canadian Pacific and Illinois Central have failed. These stocks are well-ranked for timeliness and will have good returns through the 1990s.

Railroad freight loadings have decreased in the 2nd qtr of 1995 and this is expected to continue through the year. Weather patterns and the slowing economy will also have a negative impact on railroad earnings, along with lessening of agricultural and coal loadings. Even with current earnings railroads will outperform the market in 1995 and 1996, and increased efficiency will make railroad stocks a good value.

The strength in railroad traffic in 1995 should be maintained through the rest of the year. Freight loadings, due to record grain harvests in 1994 and 1995, are at their highest since World War II and will benefit from the recently merged Burlington Northern, Chicago and North Western, and other companies. Railroads will have good earnings for 1995 and a strong return on investment for the next 3 to 5 years, with stocks outperforming the market.

The battle between Norfolk Southern Corp. (NS) and CSX Corp. for the acquisition of Conrail Inc. have raised questions regarding the potential outcome of the bidding process. NS' bid has already reached the $10 million mark, eclipsing CSX's proposal worth $8.5 million. However, analysts think that NS can only clinch the deal by further increasing its offer from $110/share to approximately $120/share.