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With a massive amount of infrastructure spending on the horizon, railroads like Union Pacific (NYSE:UNP) could be big winners, and could also help protect your portfolio if a recession hits. In this Fool Live video clip, recorded on Sept. 13, Senior Analyst Asit Sharma and Fool.com contributor Matt Frankel, CFP, explain why Union Pacific is on Asit’s short list of infrastructure stocks to watch.

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Asit Sharma: This is Union Pacific, Matt, symbol UNP. I’m trying to be consistent here with something I’ve said over the last, I don’t know, year to 18 months and several times on Live with Jason. I’ve talked about the rail companies as a great play on infrastructure. I like their strong cash flows. For example, Union Pacific generated $4.2 billion of operating cash last quarter, not last year. If you go with best in breed, which is to me Union Pacific is one of the best investments in this space, I think you’ll be able to benefit from coming investment in infrastructure. The industry does have few headwinds against it now. We’ve got the chip shortages, which is causing a little bit of variability in automobile shipments. We’ve got higher gas prices. Fuel prices are impacting investors’ outlook for the rail industry. But overall you’ve got a company in Union Pacific that’s improved its operating efficiency by leaps and bounds. They hit a 55.1% percent operating ratio this last quarter. To translate that for those of you who don’t follow this industry, that’s very efficient operations. The lower the score, the better. That was improvement of about six percentage points versus the prior year quarter. It’s a great dividend stock as well. I think they are very well poised to benefit from coming investment in infrastructure. There are a couple of blips in this picture in the Biden administration’s infrastructure plans. They have some curve balls they’ve thrown at the rail industry in that the railroads will have to work together and share access at a few points, which they’ve not been forced to do before as part of this plan. But they’ve been preparing for this for a number of years, so I think that will go smoothly. Union Pacific itself has really fluid network, great switching yards. I don’t think it’s going to be a problem for them to share access points here and there with its worthy competitors. Overall, when you’re looking to build a portfolio of really great infrastructure stocks, think of this as a core holding. It may not be the one that you wait to the most toward, but it definitely has a place in a portfolio like this. If nothing else happens, you’ll continue to reap the rewards of that strong cash flow. Like I said, a wonderful dividend stock. Lots of great improvement in their metrics over the past few years. I see further share price growth ahead for Union Pacific. This is one of my top ideas for this next year. It’s consistent with what I’ve been saying really for almost the past year, year and a half.

Matt Frankel: This also a really good recession-resistant play, it’s worth mentioning. The railroad industry, it’s very good. If we get a real recession, not like the COVID recession that lasted March and April of last year, but an actual deep recession.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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