Union Pacific will be a double-digit earnings story in 2026, Hightower’s Stephanie Link says
Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors, is betting on Union Pacific as a strong play for 2026. Transport company Union Pacific, which operates railways across 23 states in the U.S., has seen shares rise about 5% this year, significantly underperforming the broader market. Link thinks the name could get a big boost next year given its strong fundamentals and expected acquisition of rival Norfolk Southern . “It’s not been red hot … which kind of makes it interesting to me. I’m looking for 2026 stories and trying to position my portfolio over the next couple of weeks for that, and I think this story sets up really well,” Link said Monday on CNBC’s “Halftime Report.” “From a fundamental basis, I think the strong economy will continue next year, and that will lead to better volumes, and that will lead to double-digit earnings growth. And then you layer on cost efficiencies and service and productivity, and again, I think you can see double-digit earnings with margin expansion,” Link continued, adding that she is encouraged by Union Pacific’s effort to use its free cash flow to reduce debt. UNP 1Y mountain Union Pacific shares over the past year. The real kicker in Union Pacific’s growth story is the company’s upcoming railroad deal, according to Link. Union Pacific in July announced plans to buy Norfolk Southern for about $85 billion in a deal that would create the first transcontinental railroad in the U.S. The acquisition still needs approval from the Surface Transportation Board, a federal agency that oversees railroad mergers. The deal is expected to close by early 2027. “If it does go through, it’s $2 billion synergistic to EBITDA — a billion on the revenue side, a billion on the cost side,” Link said about the deal. “We probably don’t hear about approval until the second half of the year, but I think the first half of the year, fundamentals alone will continue to improve.” “It’s an outstanding management team that’s on a really good job on execution, and so I think it will catch up to other transportation stocks,” she added. Link, who is overweight industrials and financials and remains underweight tech stocks, manages Hightower’s Investment Solutions division.
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