Don’t Watch The Train Go By…
The Dynamic Wealth Report
December 14, 2011
by Marcus Haber, Editor
I was lying on the couch the other night and… POW, a revelation!
One day this economic nightmare will come to an end. The dust will
settle and the economy will start growing again.
In a moment, I’m going to tell you about a company poised to
cash in on this trend. But first, a little background…
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As the economy emerges from the abyss, savvy investors will start
opening their eyes. New money making opportunities will be foremost on
their minds.
We’ll see investors beginning to develop an appetite for growth. They'll
start rotating their money out of safe haven investments and into
sectors offering stronger growth opportunities.
This type of rotation is nothing new. Sector rotation is the natural
progression when the economy begins moving from slow growth towards full
recovery.
Two sectors poised to outperform are basic materials and
industrials.
Think about it… as economic growth picks up, we should see an uptick in
construction and homebuilding. And we should see steady increases in
manufacturing and production.
These trends will obviously increase demand for commodities like steel,
aluminum, lumber, and cotton, just to name a few. These are critical raw
materials needed to support economic growth.
Here's the key... when economic growth picks up, transportation
companies will see a return to boom times. As a result, I'm
officially bullish on stuff that moves.
You see... someone's going to have to haul these commodities all over
the country. So, who stands to benefit the most? You guessed it... the
railroads.
Kansas City Southern (KSU) is my favorite railroad. This is a
name you're going to want to own.
Kansas City Southern is a holding company with railroad investments in
central and southern parts of the United States. More importantly… they
are one of just a few railroads operating from northeastern and central
Mexico all the way down to Panama.
KSU is a gem. During the economic crisis and downturn, KSU has clearly
outperformed the S&P 500. In fact, during the past three years, KSU is up
55% compared to the S&P's 14% return.
Imagine the money to be made on this company as the economy continues to
grow!
One big growth driver is the company's Mexican operations.
You see, last year Chrysler announced they're going to open their sixth
manufacturing plant in Saltillo, Mexico. The new factory solidifies
Saltillo’s status as the country’s premier automotive manufacturing hub.
And KSU is the major railway operator servicing this new industrial
center.
But wait, it gets even better…
The company's financials are in great shape...
For the first nine months of 2011, Kansas City Southern showed revenue
up an amazing 24% to $544 million. In addition, analysts are expecting
revenue growth of 10% in 2012. This robust growth is due to increased
shipment volumes as well as additional shipment ports.
The company’s earnings are growing rapidly as well. Over the first nine
months, KSU earned $2.13 a share versus $1.04 a year ago. That's an
impressive 100% increase year over year! What's more, earnings for all
of 2011 are expected to surge 68% to a whopping $2.81 a share.
So, where does this leave us?
It’s crystal clear that Kansas City Southern is a great company to own
in these rough economic times. I can only imagine what it’s capable of
doing under normal market conditions. I don’t think you could ask for a
better long term company as the economy begins the healing process.
Best Investing,
Marcus Haber
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