Opinions John O'Connell, CFA
CSX CorpCSXDON'T BUYJun 02, 2014
John O'Connell, CFAStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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It broke out last December. After consolidating, it's breaking out again. For traders, he likes $43, the rising 50-day average, at a minimum will lock in a gain but allow you to stay in the stock long enough. For investors, $43-44 is support and will take out $47. There's earnings growth. Will pass $50.
The market is speculating if CSX will merge with another railroad, but CS has only 3 years under this president to do it, since another president likely won't give that much latitude to an already-concentrated industry. And the Norfolk Southern-Union Pacific is hitting speed bumps. He wouldn't buy CSX based on takeover speculation, but on improving business. Yesterday's quarter: a modest top and bottom line miss, but strong operating metrics and a 1% YOY volume increase and offered a positive full-year forecast including revenue growth and operating margin expansion. CSX will do fine in a stagnant economy and be a big winner if the economy picks up.
Will benefit 6-8% from US tax cuts to come and a strong US economy. CSX reduced their share count by 34% in the last 10 years, while dividends have risen.
(Analysts’ price target is $38.59)
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Rails have all really done quite well. His sense is that there has been a bit of a railroad bubble in that people have been so optimistic about oil by rail. Expects there will be increased regulations such as the number of rail cars and the quality of them. It will be more expensive to lease new rail cars. He would be looking at railcar owners. Element Financial (EFN-T) are getting into leasing of rail cars, which is one you could look at. All the rails look pretty pricey here.