Railroads are an attractive business. Barriers to entry are high, substitutes are disadvantaged, pricing power is favorable, and long-term demand is reliable. Railroads also benefit from powerful operating leverage. Operating leverage turns small revenue increases into big earnings gains. In the last year, a few of the major railroads turned a 15% revenue gain into a 60% increase in operating profit. Of course, operating leverage works in reverse when revenues decline, but over time, revenue growth in the railroad industry mirrors GDP growth.

Burlington Northern (NYSE: BNI) is the only major railroad that is still reporting volume growth during the housing recession. The railroad hauls more grain products than any other railroad, including grain for ethanol, and ethanol itself. Burlington Northern is also a big mover of low-sulfur coal. The company hauls enough coal to light up 10% of the nation's homes.

Canadian Pacific (NYSE: CP) was the first transcontinental railroad in North America, and today it is the region's sixth-largest railroad by revenue. Canadian Pacific is making aggressive moves into the energy transportation business. The company has plans to lay new tracks into Alberta's oil sands processing area, and a recently announced acquisition of Dakota, Minnesota & Eastern Railroad (DM&E) will allow Canadian Pacific to build new tracks into the coalfields of Wyoming's Powder River Basin. DM&E also provides Canadian Pacific with exposure to the grain-and-ethanol transportation business.

The Wall Street Journal reported recently that American Funds' Growth Fund of America just passed the $200-billion asset mark. How does a mutual fund grow to manage $200 billion? A 5.75% front-end sales load and a 12b-1 kickback to bribe brokers to push the fund is a start. The fund also must remain open regardless of what is in the best interest of shareholders.

The Growth Fund of America should have been closed at about $100 billion. Just to take a 2% position in a new stock requires the fund to invest $4 billion. Young Research estimates that the number of stocks that the Growth Fund of America can buy without violating the fund's fundamental investment policies is 87. For a 1% position, the field of candidates moves out to only 185. After accounting for management fees and transaction costs (huge when you take a $4-billion position) the only chance the Growth Fund of America has of even matching the performance of the S&P 500 is through sheer luck.

Did you know that Unilever (NYSE: UL) is using nano-technology to make foods taste better and household products work more effectively? The company describes ice cream not as dessert, but as a "complex multi-phase structure consisting of ice crystals, air bubbles and fat particles dispersed in a continuous phase consisting of unfrozen sugar solution." Try asking for that on a cone! UL is the world leader in ice cream, spreads, teas, dressings, meal replacement, skin care, and deodorants. UL's shareholder-friendly management has a strong record of returning cash to shareholders through buybacks and dividends.

British Petroleum's (NYSE: BP) newest clean-energy campaign pairs it up with none other than Junk-Mart. BP will be powering 22 stores in California and Hawaii with solar panels placed on top of store roofs. If this is another scheme to attract high-end shoppers, it won't work. Crowded aisles, long lines, and cheap plastic merchandise are big turnoffs to the high-end shopper. On the other side of this deal, the "beyond petroleum" slogan that BP has adopted looks great on PR releases, but reality looks even better. BP still generates 96% of its profit from oil and gas production, refining, and marketing.