Breaking News
LAST CHANCE for Cyber Monday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

CSX Corporation Stock: Buy Before The Train Leaves The Station

By (Sean Sechler )Stock MarketsJan 08, 2021 05:21AM ET
CSX Corporation Stock: Buy Before The Train Leaves The Station
By (Sean Sechler )   |  Jan 08, 2021 05:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

If you are a believer in a quick economic recovery for our country, several sectors are worth looking into for investment opportunities at this time. For example, the industrial sector has been completely disrupted by the global pandemic but could be coming back strong this year. Specifically, transportation companies have had to dramatically adjust their businesses to deal with the challenges presented by COVID-19. These are companies like airlines, trucking companies, and railroads that move people and things across the country.

While many of these companies are not completely out of the woods yet, some encouraging signs are coming out of the industrial sector at this time. One railroad stock in particular looks like it could be heading higher in the coming months. CSX Corporation (NASDAQ:CSX) operates the largest freight rail network in the eastern United States and the stock is breaking out of a few months of consolidation, making it a great option for investors that are interested in adding shares of one of the top names in the industrial sector. Let’s take a further look at why CSX is a buy below.

A Leader in Cost-Efficient Rail Deliveries

If you aren’t familiar with the rail industry, it’s important to understand that rail traffic is usually used to judge the status of economic activity in the country. Since many of these companies including CSX Corporation transport industrial materials across the United States, if they aren’t seeing heavy traffic, it could be a concern for the overall economy. That’s why investors who are confident that our country is heading in the right direction in terms of a rebound should be looking at a company like CSX.

The US rail industry is an oligarchy, with only 4 major companies generating 88% of the industry’s revenue. CSX is one of those 4, meaning that investors are adding an industry-leading business. It operates the largest freight rail network in the eastern United States, with over 26,000 miles of track connecting commercial markets across many of the largest cities in the country. Consumer product shipments have boosted the company’s intermodal volumes already, and if industrial activity picks up quickly this year CSX will benefit greatly.

Investors can break CSX down into three business lines, merchandise, intermodal, and coal. Merchandise includes shipments of tons of different things like agricultural and food products, metals, automotive, chemicals, and forest products. The coal business line involves shipping domestic coal, coke, and iron ore to power plants and steel manufacturers. Finally, the intermodal business uses trucks and terminals to help customers take advantage of the company’s large railway network. Intermodal shipping has several advantages over truck companies, as it can help to reduce costs, mitigate shipping risks, and provide a fuel-efficient way to transport things across land. The company saw 7% year-over-year volume growth in this business line in Q3, and it could be a strong growth driver going forward.

Share Buybacks & Dividends

Another reason to consider adding shares of CSX Corporation at this time has to do with the company’s share buyback program and dividend payouts. In Q3, the company’s board approved a $5 billion share repurchase program which should help to improve the company’s EPS, even though the pandemic has temporarily caused a decline in overall volume. Thanks to the existing $1.1 billion in the previous buyback program, the company will be buying $6.1 billion in outstanding shares. While reducing the number of outstanding shares isn’t the right choice for some companies, a mature company with strong cash flows like CSX uses buybacks to return wealth directly to shareholders.

There’s also the dividend payouts that investors will receive from investing in CSX. While the current 1.13% dividend yield isn’t all that high, the fact that CSX has a 3-year dividend growth rate (CAGR) of over 10% is certainly appealing. While you might be concerned about the company’s ability to maintain its dividend due to the impacts of COVID-19, CSX generates enough free cash flows to ease those concerns. With a Cash and Cash Equivalents figure totaling $2.8 billion at the end of Q3, it’s clear that the company has a strong financial position.

Final Thoughts

With minimum competition thanks to its massive freight rail network and a diverse customer base, CSX could reward investors with long-term growth, particularly since the economy might be recovering sooner than many anticipate. The company is already reporting a strong increase in rail volume, as CSX saw total volume increase by over 21% between Q2 and Q3. The stock is up 6.8% already in 2021 and is a solid pick for any investor interested in exposure to the transportation sector.

Original Post

CSX Corporation Stock: Buy Before The Train Leaves The Station

Related Articles

CSX Corporation Stock: Buy Before The Train Leaves The Station

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email