Over the last five years, the railroad sector's stellar performance has largely come about due to the wide-scale adoption of precision scheduled railroading (PSR) management techniques. However, the question now is whether the outperformance versus the stock market can continue for stocks like Union Pacific (NYSE: UNP). Let's look at the puts and takes behind the debate.
For those readers unaware of PSR, it's a set of management principles pioneered by legendary railway man Hunter Harrison. Adopted by all the leading listed North American railroads, PSR emphasizes running fixed schedules at fixed points on a network. This is opposed to the traditional hub-and-spoke model. One key difference is that PSR practitioners are willing to adjust the freight price to fill routes, while the hub-and-spoke model tends to result in freight cars sitting idle in hubs while they wait to be attached to trains.
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Source Fool.com