Norfolk Southern
Cramer said what's good for Union Pacific may be even better for Norfolk Southern.
"At Norfolk-Southern coal shipments now account for around 26% of the company's revenues. Remember, Norfolk Southern is an east coast railroad, and the east IS where most of the coal comes from. Although most of Norfolk Southern's business is doing very well, in the last two quarters, a 14% drop in coal shipments caused their total volumes to decline by about one percent. In other words, the horrible weakness in coal has been offsetting the strength everywhere else."
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CSX
Cramer thinks CSX is worth a look too.
"This is a very well-run railroad," Cramer said. "Although CSX has been getting hammered by declines in coal volumes—down 17% quarter-to-date, it's other traffic is going strong."
All told, Cramer thinks higher nat gas prices are a boon for railroads because coal, which is cheaper, becomes more desirable financially.
"As long as natural gas prices are rising, the three railroads mentioned above should keep chugging higher. Union Pacific is the cheapest, and Norfolk Southern has the most leverage to a coal rebound," said Cramer.
Kansas City Southern
If you believe in the recovery but the whims of nat gas leave you cautious Cramer has another idea all together.
"Look at Kansas City Southern," he said. "It's a smaller railroad that connects Mexico with the United States," he said, "it controls most of the freight transported between the two nations." As the economy of Mexico takes off, Cramer believes shares of Kansas City Southern could take off too.