I continue to use rail freight traffic as an indicator of economic growth in different materials. If freight volume of lumber is down then the lumber market is being affected. I would suggest using [railfax.transmatch.com] or [www.aar.org] to view rail traffic.

That fiscal swamp California is raising costs for transpacific shippers. This presents an opportunity for investors willing to bet on an upstart competitor, Mexico.

In 2008 California raised port fees in Long Beach by as much as $160 per 40-foot shipping container. West Coast longshoremen pull down an average $136,000 a year in wages. That kind of pay, combined with the port fees, brings the cost of getting a container ashore to $901. The competition comes from the fast-growing deepwater port Lázaro Cárdenas, which is 1,500 miles down the coast from Long Beach, 450 miles from Mexico City and 815 miles from San Antonio. The Mexican port can get a 20-foot container ashore for $235.

Our stock tip comes from Randolph McDuff, a 45-year-old former broker in Manitoba with one of the best records on Marketocracy.com. He recommends Kansas City Southern ( KSU news people ) (KSU, 25), the railroad that controls virtually all of the rail traffic out of Lázaro Cárdenas. The railroad has an enterprise value of $4.2 billion, or 2.6 times trailing 12-month revenue. The stock, down 51% in the last 12 months, goes for 26 times trailing earnings and 1.1 times book value. Says McDuff, “Wall Street isn’t considering the California issue in KSU. I couldn’t be more excited by their collective inattention.”