Cramer recommends monitoring railroad stocks amidst Red Sea tensions' impact on freight transportation.

• On Wednesday, CNBC's Jim Cramer suggested that railroad stocks may be starting to climb, explaining how the troubles in the Red Sea aid companies.
• Union Pacific, Canadian Pacific Kansas City, CSX, and Norfolk Southern's earnings reports were reviewed by Cramer. While all except Norfolk Southern have potential, Cramer found the latter to be lacking.

On Wednesday, Jim Cramer of CNBC proposed that railroad stocks might be experiencing an upward trend.

The ongoing attacks by Yemen-backed Houthis on ships using a crucial freight route in the Red Sea have led major shipping companies to pay additional costs for rerouting their vessels. These costly detours could positively impact the struggling freight industry, which has been in a recession for several years.

These overseas freight disruptions, which cause goods to be sent to the U.S. via the West Coast instead of the East Coast, may give western railroad companies an advantage.

"These shipping disruptions in the Red Sea have caused many companies to reroute their goods to the West Coast instead of going through the Suez Canal, Mediterranean, and Atlantic to reach the East Coast. This is great news for West Coast operators like Union Pacific and Canadian Pacific Kansas City," Cramer stated.

Cramer analyzed earnings reports from , , and , concluding that all except the latter have potential. Although CSX's quarter was better than expected, it still showed decreased earnings. Nevertheless, Cramer was optimistic about the company's volume growth, which he considered crucial for railroad companies, and was impressed by management's positive outlook for the full year.

Union Pacific's revenue exceeded expectations, and its volume growth is encouraging, according to Cramer. Among the companies, Canadian Pacific Kansas City experienced the most significant volume growth.

Despite being expected, Norfolk Southern's quarter performance was below par, and Cramer labeled the stock as a "serious laggard" since the derailment of one of its trains in Ohio.

Cramer advised investors to focus on railroads, specifically Union Pacific, Canadian Pacific, and CSX, as the freight recession ends and ocean shipping disruptions improve. He recommended avoiding Norfolk Southern for the time being.

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