Cramer Recommends Union Pacific

Despite the market declines over the last two months, it seems as though investors have very few good investment choices. The choices seem to be limited to high yield dividend stocks or high growth CANDIES stocks.

“It has gotten way too gloomy around here,” said Jim Cramer on his CNBC Mad Money show. However, Cramer said that Union Pacific (UNP: 78.80 +1.93%) is one stock that is “good and getting better.”

The railroad stock has benefited from recent bullish comments by CEO James Young. Mr. Young stated that the outlook for UNP was strong given that carloads are up 17% for the quarter so far, and pricing has risen 3.5%. All six of Union Pacific’s businesses have seen volume growth from the end of the second quarter up to now.

The railroad is also expecting more price increases in the second half of the year and is already ramping up for the expected demand increases. The company has rehired 2,000 former workers. And the outlook at the railroad is much cheerier than last year when the firm laid off over 3,000 workers.

This success from Union Pacific has surprised some investors, since railroad stocks generally only perform well when the economy is humming along nicely. However, Union Pacific’s CFO said the company is taking business away from their trucking competitors.

With a P/E multiple of 13 and a 12% growth rate, Cramer believes that Union Pacific is cheap and recommends investors jump aboard the train before it leaves the station.