Kansas City Southern (NYSE:KSU)

Yesterday, the stock gained $3.29, or 5.24 percent, to close at $66.10. Yesterday's trading range of $64.74 to $66.95 compares with a 52-week trading range of $45.63to $68.5. Currently, analysts' one year target price is at $68.50.

Despite a sluggish U.S. economy, KCS continues to benefit from favorable growth prospects in Mexico, rising volumes, and moderate core pricing increases, and we expect these trends to continue for the rest of 2011 and into early 2012. Moreover, Kansas City Southern's credit measures have strengthened due to earnings improvement and modest debt reduction. As a result, I rate this stock a good Buy.

Based on a log-normal random walk, within the next month there is a 95 percent chance the stock price could be between $54.89 and $84.3. Buying at current levels could amount to a profit-loss ratio of 1.62 to 1.

Norfolk Southern Corp.  (NYSE:NSC)

Yesterday, the stock gained $2.60, or 3.69 percent, to close at $73.04. Yesterday's trading range of $72.37 to $73.20, compares with a 52-week trading range of $57.57 to $78.40. Currently, analysts' one year target price is at $86.

A solid competitive position in the U.S freight railroad industry with a diversified mix of commodities and customers, a strong liquidity position,  good operating performance and consistent service metrics make it an attractive investment.

Based on a log-normal random walk, within the next month there is a 95 percent chance the stock price could be between $63.40 and $86.69. Buying at current levels could amount to a profit-loss ratio of 1.42 to 1.

Union Pacific Corp.   (NYSE:UNP)

Yesterday, the stock gained $3.97, or 4.2 percent, to close at $98.53. Yesterday's trading range of $97.46 to $98.97, compares with a 52-week trading range of $77.73 to $107.89. Currently, analysts' one year target price is at $114. I reiterate that the stock will test $110, and possibly $115 by the end of Q4.

Recently, the company announced that it will hike its quarterly dividend by 26 percent. I expect Union Pacific to continue to benefit from strong operating efficiency and moderate pricing gains, resulting in satisfactory operating profitability, FFO to debt is in the 40 percent area, and total debt to capital is in the mid-40 percent area. I characterize the company's business risk as strong, financial risk as intermediate, and its liquidity as strong. Overall, I rate the stock a good Buy.

In the last three months, the stock gained $8.98, or 10.03 percent. Based on a log-normal random walk, within the next one month there is a 95 percent chance the stock price could be between $85.97 and $117.36. Buying at current levels could amount to a profit-loss ratio of 1.5 to 1.