Are Railroad Stocks Overbought?

http://beta.fool.com/scoophoop/2013/03/06/are-railroad-stocks-overbought/25816/

Are Railroad Stocks Overpriced?

By Michael Hooper - March 6, 2013 | Tickers: CNI, CP, UNP | 2 Comments

Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Some investors have plunged into railroad stocks, believing they will benefit from a stronger North American economy in 2013. But are they overly optimistic?

Transportation stocks, as measured by the Dow Jones Transportation Average, gained 13% in the first two months of 2013, double the gain made in all of 2012.

Railroads reflect the health of their economies. For 2012, the US economy grew 2.2%, up from the 1.8% growth of 2011. And the Canadian economy in 2012 expanded 1.8%, down from the 2.6% growth in 2011. Both economies had sluggish fourth quarters, but this has been a slow recovery with choppy ups and downs.