Friday, January 16, 2015

Recent buy: UNP

I took the opportunity to add to my Roth IRA 6 shares of UNP after the recent pull back from the decrease in oil prices.

My current holding in UNP is 2.44% of my portfolio. It brings in $34 in dividends a year. This is still not a full position yet so I will be willing to add more on further dips.

CSX recently reported solid earnings. I expect UNP to do the same, despite the decrease in oil prices. I have attached a earnings plot of UNP and it is nothing short of impressive. I expect the growth to continue unless the US encounters a recession. Their credit rating of A and 33% Debt/cap ratio makes them a financial sound holding to me.



I still have $5000 in cash on the sidelines. I am still looking for opportunities but things are relatively expensive at the moment. I don't want to dip into my CVX and XOM shares too fast since I think there is still some more volatility in the energy sector.

I'm happy to say that my Roth is now maxed for the 2014 year :)

2 comments:

  1. What do you think is the connection between oil and the railroads? I would think that UNP would benefit from cheaper oil due to lower fuel costs for the trains. Thanks

    CD

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  2. CD, thanks for commenting. Frankly I cannot predict what lower oil prices will do to the average consumer. It is quite difficult predicting what other people will do, there are just too many players involved. I have read articles that the increase in Christmas spending did not materialize as analysts have predicted.

    My purchase in UNP was for their diversified cargo. I believe ~5% of their shipments are petroleum related. This website will show you UNP's weekly carloads:

    http://www.up.com/investors/reports/archive.cfm?Year=2014

    -YD

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