"The railroads have potential to capture more share," Bingham said.

Activist shareholders

Railroads also appear to be responding to pressure from new shareholders to improve returns.

In addition to CSX, TCI bought stakes in Union Pacific and Norfolk Southern, the fourth-largest U.S. railroad. Amin told rail executives and others who attended a transportation conference in May in New York that CSX and other railroads should increase their debt and raise prices as means to return more cash to shareholders.

Since Amin spoke and met with management, CSX said it will raise prices as much as 7 percent this year, and Norfolk Southern said it may expand a share buyback program it announced in March.

Other new investors include Buffett's Berkshire Hathaway Inc., which disclosed an 11 percent stake in Burlington Northern in April, making it the railroad's biggest shareholder. Berkshire was also among the 10 biggest shareholders of both Union Pacific and Norfolk Southern as of March 31, a filing showed.

Billionaire Icahn, who often uses his influence as a large investor to press for changes at companies to boost share prices, bought a $122 million stake in CSX, a May filing showed.

Volume dip

A slowdown in the U.S. economy could still derail the industry's growth. The recent decline in freight is expected to continue through the end of the third quarter, said Global Insight's Bingham.

The volume dip may cut into near-term profits, UBS Securities analyst Rick Paterson wrote in a June 14 report.

Proposals in the U.S. Congress, supported by some railroad customers, may also repeal current antitrust exemptions for rail operators, giving customers more power to negotiate lower prices. Separate legislation in the U.S. House of Representatives would tighten rail safety regulations, adding cost for the industry.

None of it has stopped railroad shares from advancing. On June 14, Union Pacific told investors to expect this quarter's earnings to be lower than analysts have predicted. The stock rose 1.2 percent, and another 1.8 percent the following day.

"The market either didn't notice," Paterson wrote, "or didn't care."

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Contributing: Greg Bensinger