Waiting for the whites of their eyes

Since March we have been very cautious on the near-term prospects for the railroad stocks, warning investors on multiple occasions about the disappointing volume outlook for the group. These warnings have proven timely as the group has fallen 9% in 2Q 2015 and 14% year to date. Earnings expectations have been coming in, but the big question in the minds of investors has been if/when to put more money to work in the railroads. We believe the group is still a good long-term spot for investors to park their money but acknowledge that timing will be imperative in order to maximize returns.