To increase production of oil and national gas
The Transportation-Rail group ranks No. 3 of 197 industries that IBD tracks. The group has steadily moved up the rankings for the last 26 weeks.
Railroad stocks have been among the chief beneficiaries of new techniques to increase production of oil and national gas in the U.S. and Canada. These techniques, such as horizontal drilling, have allowed oil and gas producers to get fuel from unconventional sources such as shale formations and tar sands.
The rise in oil and gas production has increased demand for ways to transport fuel, including rail, truck and pipeline.
The demand is visible in recent financial results. Canadian National Railway, which boasts an IBD Composite Rating of 99, posted a double-digit revenue and EPS gain last quarter — the first time that's happened in nearly two years.
Similarly, both Canadian Pacific and Union Pacific logged double-digit-percentage increases on the top and bottom lines for the first time in more than two years.