Stockchase Opinions

Michael Simpson, CFA CSX Corp CSX-Q PARTIAL SELL Jan 20, 2017

An Eastern based railroad. When Hunter Harrison was still employed by Canadian Pacific (CP-T), overtures were made to do a merger. He used to own this because it was cheap, hoping that the existing management would turn it around. If you own, he would be inclined to take some profits.

$44.330

Stock price when the opinion was issued

Transportation
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BUY
CSX just announced a huge share buyback program and a nice earnings beat. Impressive given that this is a smaller railroad.
BUY
Reports next week. The industrial cargo business is growing stronger. If this sells off in response to Union Pacific, then buy.
BUY

Really likes the rails, a cyclical group. CN, CP, CSX trade as a team. Transport is doing quite well, and the rails have a lot of leverage in their business models. Done a great job managing operating expenses.

PAST TOP PICK
(A Top Pick Jun 22/21, Up 16.5%) Railroads are benefiting from the infrastructure and supply chain, because rails are the leading way to transport good. This is a positive. He sees 8% earnings growth. Still a buy.
BUY
He started buying it today at $36 and it's pushing $37. Upside call is $37.50.
BUY
This is an east coast railroad, and east coast ports will get more business (west coast ports are dysfunctional). They are minting money with coal shipping; Europe has de-nuclearized, so it needs other sources of energy. A long-term investment. Is down 16% this year, but has a lot of upside.
BUY

Run by a great CEO. The company is becoming more customer-oriented. He targets $40.

BUY

Last week, they reported a good quarter with stable volumes, up 1% YOY, led by automotives, chemicals (up 5%) and fertilizer (4%). Revenues beat, but earnings were down 8% over the year. Also, they raised guidance.

TOP PICK

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)