Shares in this transport sector have been hit hard, following the recent downgrading of the trucking sector by a Wachovia Capital Markets analyst.

But contrarian investors should be wary of such ‘expert’ opinion. Floyd Brown in Investment U says: “Trucking is an integral part of our national goods transportation network. And because it’s tied so closely to our economy, it will also be one of the first sectors to see a turnaround.“

Floyd says savvy investors should follow Warren Buffett into undervalued transport stocks now…

Even Warren Buffett - the closest person America has to a modern day industrialist - has used the last few years to build an increasing stake in transportation stocks like Union Pacific (NYSE:UNP), Norfolk Southern (NYSE:NSC) and his biggest purchase by far, Burlington Northern Railroad (NYSE:BNI).

• BNI transports goods eastward from Pacific shipping ports, and commodities such as coal and corn around the Midwest over 32,000 miles of track in 28 states and Canada. It is currently trading at a forward PE of 14.
• Railroads are coming back into vogue as their economy and their cost effectiveness make them popular again. That’s why Warren Buffett took a $5 billion stake in the railroads.
• Trucking also deserves a look. YRC Worldwide (Nasdaq:YRCW) and Knight Transportation (NYSE:KNX) were hurt along with the rest of the sector with the spike in diesel costs this spring. With energy prices starting to settle down, the larger concern for trucking companies is the overall economy, as a continued slowdown will be just as costly.

Transportation Stocks - Calling All Contrarian Investors

For contrarian investors like myself, buying when the rest of the crowd isn’t in love with a particular sector or company is par for course, as is the case with transportation stocks. The secret is to find value that everyone else is missing…

For example, YRC Worldwide is trading in deep value territory at only 62% of book value. With revenue over $165 per share, this firm is selling at approximately 10% of its sales. The forward PE is only 11.

Commodity, oil and agricultural products all had a significant price increase this spring and summer as energy prices impacted profitability across the board. Many have already seen their prices crash downwards along with crude oil, and it remains to be seen whether this will continue.

While slowing with the U.S. economy, international development around the world will continue to be an engine of growth to drive production in multiple industries and there will always be a need to transport these products.

As the great leaders and businessmen of the 19th Century knew, markets can retreat, but after every retreat comes a new day of increased growth and higher market returns.

By investing like the great industrialists, we can follow their examples to great wealth. Build your fortune the same way as Vanderbilt and Buffett by investing in unloved and undervalued sectors like transportation…

Source: Follow the Great Industrialists to Incredible Wealth