Is Union Pacific a Good Investment?

PHOTO CREDIT: Union Pacific

OVERVIEW

Union Pacific Corporation is a company based in the United States. The company owns and operates a rail service for cargo and freight in the United States. The company transports everything from oil to forest and food products. The company owns over 32,000 miles of railroad track and over 8,000 locomotives. The company was founded in 1862.

Why You Should?

  1. Union Pacific is a great reopening play in an investor’s portfolio. The COVID-19 pandemic has decimated the demand for cargo transportation as the pandemic reduces the demand for key product like oil and coal. This has caused volumes for Union Pacific to drop during its latest financial year. Once this pandemic is over, the company will see rising volumes and good growth.
  2. A Biden administration will have positive impacts for the company as well. Biden will look to mend relations with our key trade partners, causing a rise in demand for goods within the nation. This will aid Union Pacific’s recovery from this pandemic and will also offer the company with some great growth opportunities. This will also benefit investors in the company.
  3. Union Pacific’s stock will continue to move higher as the global economy grows. This is because as industrial economies grow, company’s will need to further utilize the services offered by railroads in order to transport products and for companies like Union Pacific to become key parts of the supply chain. These long-term growth will also benefit investors in the company.
  4. Union Pacific has been a key part of many investor’s portfolio in the past due to its strong performance and stable stock price. I believe that this stock will continue on its steady growth trend in the future but adverse impacts and conditions might hurt the company’s performance. I think that Union Pacific has some more room to grow and maintain its strong performance in the future.

Why you Should Not?

  1. Union Pacific will have to deal with lower transportation demands for products like oil and coal in the future as the world uses more green energy than non-renewable sources. This might hurt the company but it should adapt in order to capture the demand for green-energy transportation.
  2. Union Pacific faces tough competition in the railroad and freight transportation industry. Some of these competitors include CSX, Kansas City Rail, FedEx, UPS, and many others. This competition might hurt the company in the future and might also hurt investors as well.

MY OPINION

I think that Union Pacific is a decent long-term investment due to its position as a good reopening play, positive impacts from the Biden administration, growing global and industrial economies, as well as its past steady performance and growth. However, weaker demands for some of the company’s products and tough competition might hurt the company in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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