Riding the Railroad Boom
Don and Craig Hodges of Hodges Fund say high fuel costs are benefiting the rail industry. They also like steel and high-tech stocks
What stocks will do best in the days to come? Don and Craig Hodges, the father and son team who co-manage the Hodges Fund (HDPMX ), say transportation, steel, and high-tech stocks should come out on top. As Don Hodges explains it, railroads are particularly attractive partly because high fuel costs are affecting other modes of transport more severely and because many goods arrive from China on the West Coast and then continue by rail.
Their favorite railroad is Burlington Northern Santa Fe (BNI ), but they also like a few truckers, including Yellow Roadway (YELL ) and Frozen Food Express (FFEX ). In high-tech, the picks include data-storage company EMC (EMC ), Sun Microsystems (SUNW ), and Texas Instruments (TXN ). Their largest holding is Commercial Metals (CMC ).
Craig Hodges says the fund looks for the best stocks all over the market -- small- or large-cap, growth or value. "We're very stock-specific," he says. Don Hodges reports that "on a three-year annualized basis, our return is 17.51% per year, while the peer group is 3.93%, and the S&P is 2.34%."
The Hodges made these points, and more, in an investing chat presented Nov. 18 by BusinessWeek Online on America Online, in response to questions from the audience and from Jack Dierdorff and Karyn McCormack of BW Online. Following are edited excerpts from this chat. AOL subscribers can find a full transcript at keyword: BW Talk.
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