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QR National chugs on

As we enter the last month of 2012 it is interesting to look back and assess how individual companies have fared. Rail freight owner and operator Aurizon (ASX: AZJ)- formerly QR National (ASX: QRN) – controls a strategically attractive rail network, however its share price has underperformed the market, returning 4.5% for the year, compared with a 10% return from the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) .

With a significant portion of its business hauling coal around Queensland, early 2012 saw the market concerned that the drop in commodity prices would negatively affect QR National’s profits. While there was a significant drop in coal volumes hauled, to management’s credit this issue has been well managed by QR National. In October, the board announced it had reached agreement to buy back 12% of shares outstanding from the Queensland Treasury – a move expected to be earnings per share (EPS) accretive and increase return on equity (ROE).

At the recent Annual General Meeting (AGM), which marked two years as a listed company, CEO Lance Hockridge provided guidance to the market that overall volumes were a little softer than the previous year but maintained expectations for coal volumes to grow 4% to 6%, placing coal volumes near record highs. In comparison, Asciano’s (ASX: AIO) first quarter update produced 9% growth in coal volumes and growth across most other divisions too.

Many of the transport majors have struggled in the past year to outperform the index. Asciano, which competes with QR National in the rail freight market and also operates a number of port operations, has fallen 4%, while logistics provider and freight forwarder Toll Holdings (ASX: TOL) is up just 6%. In comparison, Chris Corrigan’s upstart Qube Logistics (ASX: QUB) has impressively outperformed the market, gaining nearly 16%.

The Foolish bottom line

AGM season provides investors with an important glimpse into the trading for the first quarter of the financial year for many businesses. It is a great opportunity to uncover businesses that may produce half-year results ahead of what the market is currently expecting.

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool contributor Tim McArthur owns shares in Toll Holdings. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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