Ackman had pushed for replacing Green with Hunter Harrison, former CEO of Canadian National Railway Co. (NYSE: CNI), but following the coup Ackman now said not to expect a coronation, “We’re going to do a proper job, we’re going to meet all the candidates and do it the right way.”

Canadian Pacific’s problems, at least according to Ackman, are due to high operating costs and he wants to reduce those costs. Ackman’s stated goal is to lower CP’s operating ratio — that is cost as a percentage of revenue — from around 80% to 66%. That would match the operating ratio at Canadian National, Harrison’s former company. Most of the credit for CN’s success, however, is attributed to Harrison’s predecessor.

CP’s main problem is that it operates mainly in western Canada in a nasty climate with difficult topography. The company hauls mainly commodity minerals and is captive to swings in the market for those minerals. Lowering costs won’t be easy once the workforce is trimmed.

CP’s ability to compete with the likes of Union Pacific Corp. (NYSE: UNP), CSX Corp. (NYSE: CSX), Burlington Northern Santa Fe (BNSF), owned by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A), and Norfolk Southern Corp. (NYSE: NSC) is dubious, given that CP is much smaller than any of these and that the only likely merger possibility is Kansas City Southern (NYSE: KSU). A potential merger between Canadian National and BNSF was squashed by regulators in 1999, so a tie-up with one of the larger railroads is unlikely.

What is likely is that Ackman has shaken up sleepy Canadian companies and shareholders. This was Canada’s first big, public battle over corporate direction and many observers believe that it’s just the beginning.

Who could be next? A good bet might by phone maker Research in Motion Ltd. (NASDAQ: RIMM) whose recent struggles are well documented.

CP did not get much of a share price boost yesterday, closing at $75.07 in a 52-week range of $44.74-$79.91. The stock is inactive in pre-market trading this morning.

Paul Ausick

American Railcar Industries Inc. (NASDAQ: ARII) also more than doubled EPS estimates for the quarter and Greenbriar Companies (NYSE: GBX) beat estimates by more than 25%. Railroads fared well too, though not with the same big move. CSX Corp. (NYSE: CSX) beat its EPS estimate by 13%, Union Pacific Corp. (NYSE: UNP) beat by about 10%, and Canadian Pacific Railway Ltd. (NYSE: CP) beat the consensus estimate by 5%.

FreightCar delivered about 3 times as many cars in the first quarter as it did in the same period a year ago. The not-so-good news is that orders fell significantly in the quarter, from 4,027 a year ago to 1,244 this year. Backlog is growing, though, from 5,206 a year ago to 6,934 this year.

Sequentially FreightCar’s backlog has dipped from 8,303 in December 2011 to 6,934 at the end of March. Orders need to pick up or the backlog will peter out in the not-so-distant future.

Rail traffic in April was down -5.5% year-over-year, and coal shipments were down -16.6%, the largest decrease on record according to the American Association of Railroads. The number of rail cars in storage now totals about 20% of the fleet, and the number has increased for five straight months.

FreightCar did not offer any guidance in today’s earnings report, but analysts are expecting EPS of $0.43 next quarter and full-year EPS of $1.88. Given today’s strong report those look like slam dunks. But there are a couple of reasons to be cautious here.

FreightCar’s shares are up about 3.7% in the first 45 minutes of trading, but the shares had traded up as much as 18% in the pre-market. The 52-week range is 12.82-$24.01.

Paul Ausick

Based on CP’s first quarter performance, Ackman may have some tough sledding. The company posted revenue of of $1.4 billion, higher than the consensus estimate of $1.32 billion and EPS of $0.82, again higher than the consensus estimate of $0.78. That’s EPS growth of more than 300% over the same period a year ago. But the troubles facing other US carriers, like CSX Corp. (NYSE: CSX) and Union Pacific Corp. (NYSE: UNP), will also hound CP in the current quarter.

That trouble is coal shipments, which all carriers reported to be down and which are expected to go lower in the current quarter. Union Pacific said yesterday that it expects already weak coal shipments to fall by another -8% in the current quarter, down from a total of 22% of carloads to somewhere in the mid-teens.

One good quarter won’t quench Ackman’s thirst, though, and CP has a formidable challenge going forward, either as is or under Ackman’s control.

CP has seen no activity in the pre-market. Shares closed yesterday at $76.45 in a 52-week range of $44.74-$74.91.

Paul Ausick

CSX reported revenues of $2.97 billion, better than the consensus estimate of $2.91 billion and up 5.7% compared with the same period a year ago. EPS came in at $0.43 compared with a consensus estimate of $0.38. Other US carriers Burlington Northern Santa Fe, owned by Berkshire Hathaway Corp., Canadian National Railway Ltd. (NYSE: CNI), Canadian Pacific Railway Ltd. (NYSE: CP), Kansas City Southern (NYSE: KSU), Norfolk Southern Corp. (NYSE: NSC), and Union Pacific Corp. (NYSE: UNP) are still to come. Here’s a look at what analysts expect.

Burlington Northern’s revenues and earnings are reported with Berkshire Hathaway’s later this quarter. Year-to-date, petroleum carloads are up 45% while coal loads are down -6%. Other gains are autos, up 13.6%, while intermodal traffic is up just 1.15%.

Canadian National Railway Ltd. (NYSE: CNI) is expected to post revenue of $2.27 billion and EPS of $1.02, an increase of 13% over the same period a year ago. The company reports earnings on April 23rd.

Canadian Pacific Railway Ltd. (NYSE: CP) is expected to post revenue of $1.32 billion and EPS of $0.78, a whopping 310% increase over a year ago. The company put out a preliminary estimate of EPS at CDN$0.83 earlier this month. Canadian Pacific reports earnings on Friday.

Kansas City Southern (NYSE: KSU) is expected to post revenue of $543.24 million and EPS of $0.72, a 24% increase over the same period a year ago. The company reports earnings on April 24th.

Norfolk Southern Corp. (NYSE: NSC) is expected to post revenue of $2.75 billion and EPS of $1.12, an increase of 12% over last year. The company reports earnings on April 24th.

Union Pacific Corp. (NYSE: UNP) is expected to post revenue of $4.98 billion and EPS of $1.63, an increase of 26% over the same period a year ago. The company reports earnings tomorrow.

Expectations are for rail stocks are high and, based on the gain reported yesterday at CSX, it looks like those hopes are about to be realized.

Paul Ausick

The company’s traffic in March was down -13.6% year-over-year and down -9.2% for the quarter compared with the same period a year ago. CSX Corp. (NYSE: CSX), Union Pacific Corp. (NYSE: UNP), Norfolk Southern Corp. (NYSE: NSC), and Kansas City Southern (NYSE: KSU) have not released numbers yet, but CSX and Union Pacific report quarterly earnings next week so we should know more then.

The decline at Genesee is virtually entirely due to a -42.7% drop in coal shipments in March and a -41.7% drop in coal shipments for the quarter. According to the Association of American Railroads’ latest traffic report, year-to-date coal shipments are down -10.2% on US railroads.

That’s not the largest percentage drop among freight types, but coal represents the largest volume of traffic on the nation’s railroads. US railroads have hauled nearly 200,000 fewer carloads of coal this year than they did last year. Put this down to the lowest natural gas prices in a decade.

The big gainer is petroleum products, which has risen 28.7% year-to-date, to nearly 120,000 carloads, up from about 93,000 a year ago. This is the effect of rail shipments from the Bakken shale fields of North Dakota and Montana, where there isn’t enough pipeline capacity to transport the oil to markets. But the total number is barely 10% of the coal volume.

Genesee’s shares closed up about 2.5% yesterday at $53.55 in a 52-week range of $44.38-$66.83. Shares are inactive in the pre-market this morning.

Paul Ausick

Fortunately there are no shipping stocks included in the average or it could have been even more thrilling. The Baltic Dry Index has fallen by -44% in the past 12 months as new ships have flooded the market and cargoes have dwindled due to a slower economy.

We’ve looked at eight companies in the transportation business to see if there is any value to be gained here: airlines United Continental Holdings Inc. (NYSE: UAL) and Southwest Airlines Co. (NYSE: LUV); railroads CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC); truckers JB Hunt Transport Services Inc. (NASDAQ: JBHT) and Landstar System Inc. (NASDAQ: LSTR); and shipping companies North American Tankers Ltd. (NYSE: NAT) and Frontline Ltd. (NYSE: FRO).

Over the past 12 months, only truckers JB Hunt and Landstar and rail carrier Norfolk Southern have been able to post share price gains. Hunt is up more than 28%, Landstar is up 27%, and Norfolk Southern is up about 7%.

United Continental Holdings Inc. (NYSE: UAL) has a consensus target price is $33.58 and the stock is trading today at around $20.80, for a potential gain of 61%. Airlines are generally the hardest and most immediately hit by increases in fuel costs. Despite that, United’s share price has gained slightly more than 10% since the beginning of the year.

Southwest Airlines Co. (NYSE: LUV) has a consensus target price of $12.46 and a current price of around $9.07, for a potential upside of 37%. Southwest’s share price is up more than 6% since the beginning of the year, though for the past 12 months it’s down more than -22%.

US rail traffic is down 0.3% year-over-year for the first two months of 2012. Container traffic is up 3.2% while truck trailer traffic is down -7.7%. In the last week of February, traffic was down -5%. None of this appears to bode well for either the railroads or the truckers.

CSX Corp. (NYSE: CSX) has a consensus target price of $27.20 and shares are trading today around $21.18, for a potential gain of 28%. CSX shares lost about -12.5% over the past 12 months but are up slightly since January.

Norfolk Southern Corp. (NYSE: NSC) has a consensus target price of $85.68 and a current price of $69.27, for a potential gain of 24%. The target price is virtually unchanged since December, but the share price has fallen by a $5/share. Norfolk Southern, one of our three gainers in the past 12 months, has lost more than -5% of its share price since January.

JB Hunt Transport Services Inc. (NASDAQ: JBHT) has a consensus target price of $54.48, and a current price of around $52.32, for a potential gain of just 4%. In December the target price was around $48, so Hunt’s target has been moving in the right direction and the stock price has kept pace. As fuel costs rise, though, Hunt could face some hard choices.

Landstar System Inc. (NASDAQ: LSTR) has a consensus target price of $56.94 and a current price of $55.41, for a potential upside of just 2.8%. The company’s target price in December was around $52, so, like Hunt, the target keeps moving up as does Landstar’s performance. Fuel costs could start trimming profits here too, though.

The shipping business has too many ships sailing around at unprofitable day rates. Until that situation resolves itself — not likely until 2013 — anything that resembles value in the shipping business is likely a mirage.

North American Tankers Ltd. (NYSE: NAT) has a consensus target price of $13.80 and current price of $14.22, indicating that the stock is fully valued.

Frontline Ltd. (NYSE: FRO) has a consensus target price of $5.83 and a current price of $5.50, for a potential gain of less than 1%. Frontline’s target price is essentially identical with it’s December target, when the stock was trading at less than $3/share.

Of the stocks reviewed here, JB Hunt has performed best for the past 12 months and is the leading performer since the beginning of this year, if you don’t count the shipping stocks. Both shipping stocks have larger gains, but they were down so far that any direction looks like up. Chasing the gains on either Nordic American or Frontline is almost purely speculative. JB Hunt, and to a lesser degree, Landstar, are the best bets here.

Paul Ausick

The unofficial closing bells put the DJIA up about 16 points to 12,965.99 (0.12%), the NASDAQ fell more than 3 points (-0.11%) to 2,948.57, and the S&P 500 rose 0.07% or nearly 1 point to 1,362.23.

There were several analyst upgrades and downgrades today, including Oracle Corp. (NASDAQ: ORCL) cut to ‘market perform’ at JMP Securities; Itron Inc. (NASDAQ: ITRI) cut to ‘neutral’ at Credit Suisse; CSX Corp. (NYSE: CSX) cut to ‘neutral’ at JPMorgan; ABB Ltd. (NYSE: ABB) cut to ‘equal weight’ at Morgan Stanley; and Gilead Sciences Inc. (NYSE: GILD) cut to ‘equal weight’ at Barclays.

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: Barnes & Noble Inc. (NYSE: BKS) is down -4.65% at $12.50 (more coverage here); Boyd Gaming Corp. (NYSE: BYD) is down -10.6% at $8.57; Clear Channel Outdoor Holdings Inc. (NYSE: CCO) is down -3.65% at $12.16; Cobalt International Energy Inc. (NYSE: CIE) is down -6.9% at $31.67; Dollar Thrifty Auto Group Inc. (NYSE: DTG) is up 2.3% at $75.08; Hecla Mining Co. (NYSE: HL) is up 9.6% at $5.50; JAKKS Pacific Inc. (NASDAQ: JAKK) is up 0.7% at $15.16; Macy’s Inc. (NYSE: M) is up 0.8% at $36.53 after posting a new 52-week high earlier today of $38.21; Medtronic Inc. (NYSE: MDT) is down -2.6% at $38.92; Pioneer Drilling Co. (NYSE: PXD) is down -0.2% at $113.45; Saks Inc. (NYSE: SKS) is up 3.4% at $11.24; Wal-Mart Stores Inc. (NYSE: WMT) is down -4.1% at $59.90; and Westlake Chemical Corp. (NYSE: WLK) is down -4.2% at $57.93.

We have a preview of tomorrow’s earnings reports here.

Other standouts from today include the following stocks:

Threshold Pharmaceuticals Inc. (NASDAQ: THLD) is up more than 43% at $5.06 after posting a new 52-week high of $6.65 earlier today. The pharmaceutical maker announced positive results for its pancreatic cancer treatment.

Corcept Therapeutics Inc. (NASDAQ: CORT) is up 49% at $4.52. The drug maker has received FDA approval for its Cushing Syndrome treatment.

GTx Inc. (NASDAQ: GTXI) is down more than -36% at $3.70. The drug maker reported that the FDA issued a clinical hold on further trials of its prostate cancer treatment.

Chelsea Therapeutics International Ltd. (NASDAQ: CHTP) is down nearly -18% at $2.75 after posting a new 52-weekl low of $2.18 earlier today. The development stage drug maker meets with an FDA panel on Thursday to review clinical data on a new drug application. More coverage here.

Weatherford International Ltd. (NYSE: WFT) is down nearly -14% at $15.34. The oil field services company will restate prior earnings due to what the company calls “material weakness in internal controls over financial reporting for income taxes relating to current taxes payable, certain deferred tax assets and liabilities, reserves for uncertain tax positions, and current and deferred income tax expense.” Weatherford expects to take a charge for $225-$250 million for the years before 2010. More coverage here.

Stay tuned for Wednesday. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 10:00 a.m. – Existing home sales
• 11:30 a.m. – 4-week bill auction
• 1:00 p.m. – 5-year note auction

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ABB Limited (NYSE: ABB) Cut to Equal Weight at Morgan Stanley.
Asbury Automotive Group, Inc. (NYSE: ABG) named as Value stock of the day at Zacks.
Banco Bilbao Vizcaya Argentaria (NYSE: BBVA) Raised to Outperform at Credit Suisse.
B&G Foods Inc. (NYSE: BGS) reinstated as Neutral at Credit Suisse.
CSX Corp. (NYSE: CSX) Cut to Neutral at JPMorgan.
Gilead Sciences Inc. (NASDAQ: GILD) Cut to Equal Weight at Barclays.
ImmunoCellular (NASDAQ: IMUC) named Bull of the Day at Zacks.
Infosys Limited (NASDAQ: INFY) Cut to Neutral at Credit Suisse.
Itron, Inc. (NASDAQ: ITRI) Cut to Neutral at Credit Suisse.
KLA-Tencor Corporation (NASDAQ: KLAC) Cut to Neutral at JPMorgan.
Lam Research Corporation (NASDAQ: LRCX) Cut to Neutral at JPMorgan.
NextEra Energy Inc. (NYSE: NEE) Reiterated Buy at Argus.
Norfolk Southern Corp. (NYSE: NSC) Cut to Neutral at JPMorgan.
Oracle Corporation (NASDAQ: ORCL) Cut to Market Perform at JMP Securities.
Willis Group Holdings (NYSE: WSH) named Bear of the Day at Zacks.

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The unofficial closing bells put the DJIA down about 33 points to12,675.75 (-0.26%), the NASDAQ rose just 2 points (0.09%) to 2,786.64, and the S&P 500 fell -0.10% or just more than 1 point to 1,314.63.

There were several analyst upgrades and downgrades today, including Netflix Inc. (NASDAQ: NFLX) maintained as ‘outperform’ with a $100 target price at Credit Suisse; Pan American Silver Corp. (NASDAQ: PAAS) maintained as ‘outperform’ but estimates lowered at Credit Suisse; Halliburton Co. (NYSE: HAL) maintained as ‘buy’ but target price lowered to $54 at Argus; Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ and target price raised to $51 at Argus; ;and Michael Kors Holdings Ltd. (NYSE: KORS) started as ‘overweight’ at Morgan Stanley, as ‘outperform’ at Baird, and as ‘buy’ at Goldman Sachs.

Earnings reports since markets closed on last night have led to some price changes as of the last half hour of trading today: Air Products and Chemicals Inc. (NYSE: APD) is down nearly -3% at $87.29; Baker Hughes Inc. (NYSE: BHI) is down -0.57% at $47.46; Clearwire Corp. (NASDAQ: CLWR) is up 2% at $1.79; EMC Corp. (NYSE: EMC) is up 6.7% at $25.01; Western Digital Corp. (NYSE: WDC) is up 6.2% at $36.85; CSX Corp. (NYSE: CSX) is down -3.5% at $21.89; and Zions Bancorp. (NYSE: ZION) is down -7.6% at $17.15. Apple Inc. (NASDAQ: AAPL) reports earnings after markets close today. See our coverage here.

Other standouts from today include the following stocks:

BioLineRx Ltd. (NASDAQ: BLRX) is up nearly 79% at $5.88 after posting a new 52-week high today of $6.87. The biopharmaceutical company has signed an exclusive worldwide licensing agreement with a French company to develop and market its hepatitis C drug.

Lee Enterprises Inc. (NYSE: LEE) is up more than 26% at $1.39. The newspaper company has been granted permission to exit bankruptcy protection.

The Bon-Ton Stores Inc. (NASDAQ: BONT) is up nearly 18% at $3.81. The department store operator has hired a new CEO who was previously the CEO at Lord & Taylor, before that chain was acquired by a Canadian company.

InterDigital Inc. (NASDAQ: IDCC) is down nearly -20% at $35.68. The wireless technology developed has shut down its “strategic review” without finding a buyer and will continue to seek additional patent sales and licensing agreements.

Achillion Pharmaceuticals Inc. (NASDAQ: ACHN) is up more than 17% at $10.79. The drug company, which is developing its own hepatitis C drug, is enjoying a halo effect from BioLineRx’s announcement.

Stay tuned for Wednesday. President Barack Obama delivers his state of the union address at 9:00 P.M ET tonight. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 10:00 a.m. – Federal Housing Finance Agency (FHFA) house price index
• 10:30 a.m. – EIA weekly petroleum status report
• 10:30 a.m. – 5-year Treasury note auction
• 2:15 p.m. – Fed chairman Ben Bernanke press conference

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In the firm’s equity income allocations, the firm is selling 100% of its allocation in American Electric Power Co. (NYSE: AEP) at $41.14 and is adding in Williams Companies Inc. (NYSE: WMB) at $28.22.

As far as growth and income, Argus is recommending to buy CSX Corp. (NYSE: CSX) at $23.32 and Monsanto Co. (NYSE: MON) at $79.00; and it is recommending that the model portfolio sell all of its positions in Occidental Petroleum Corp. (NYSE: OXY) at $97.17 and Weyerhaeuser Co. (NYSE: WY) at $19.18.

Finally, in mid-cap growth the firm’s model portfolio is buying VeriFone Systems Inc. (NYSE: PAY) at $37.12 and buying MDU Resources Group Inc. (NYSE: MDU) at $21.50.  It is selling 100% of its position in IntercontinentalExchange Inc. (NYSE: ICE) at $113.13.  Another selling stock, but only by 20% of its allocation is Hain Celestial Group Inc. (NASDAQ: HAIN).

Speaking of model portfolios, here were the 5 most undervalued DJIA stocks and the 5 least attractive DJIA stocks based upon consensus targets.  Here are the top 4 DJIA stock picks from Jim Cramer for 2012.

Also, we made a lot of changes this year to the 24/7 Wall St. 2012 Model Dividend Portfolio.

JON C. OGG