CSX Corp (CSX)

Doesn’t want CP at 20 times earnings when he can have this one at 10 times earnings. This is the ugly duckling. It is a great opportunity. It is cheap by valuation metrics and another smart buyer back of shares.

Coal has been a problem for the rails. Utilities have been switching to natural gas. As well there has been a softness in China in steel production and this will be an impact for the next quarter or 2. She is looking for an entry point of $18.

A large railroad and is different from some of the others. Their exposure to coal is about 20% (greater than others) but their price reflects it. The US has better selection of companies in Rail Roads.

Likes the rail group as kind of a soft cyclical as they carry a lot of goods and traffic. As long as the economy is not going into recession, traffic and volume growth tends to be positive. Anything that is kind of cyclical she would wait until there is clarity on the fiscal cliff. There is no point rushing in.

Exposure to coal is 20% and so they have to offset that with other commodities. But we are not shipping as much as before. They are bringing their operating ratio down. An inexpensive stock compared to Canadian operators.

US rails are not expensive. This one is trading at about 11X with an operating ratio of about 71%. One of the problems with a lot of the rails is coal. Coal shipments are down.