Time to Board CSX?
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Aug
13
Tim Lambert
Time to Board CSX?
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There is a reason that legendary investor Warren Buffett has loaded the portfolio of Berkshire Hathaway (NYSE: BRK-A) with railroad stocks.

The industry has done well in the economic recovery with companies such as CSX (NYSE: CSX) positioned well.

Shareholders of CSX have already gained from owning the stock.  CSX is up for the last week, quarter, six months, and year of market action.  For 2013, CSX has risen by 4.43 percent (chart below).  Over the same period, the Dow Jones Industrial Average (NYSE: DIA) is up by under 2 percent.

It has been stated that investing is the art of buying the future income stream of an asset.

That is certainly bullish for CSX Corp.  Earnings-per-share over the next five years are projected to increase by 9.60 percent.  For the last five years, earnings-per-share rose by 8.60 percent.  This year, earnings-per-share are up by 2.60 percent.  That is obviously a very positive trajectory for the future of CSX corp.

There is more, much more that is positive about CSX Corp. for long term investing.

It is very profitable.  The profit margin is 14.70 percent.  The average profit margin for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 9 percent.  For an industrial stock, that is very attractive feature.

The dividend yield is above average, too.

At present, the average dividend for a Standard & Poor’s 500 Index member is under 2 percent.  The dividend yield for CSX Corp. is 2.15 percent.  There is plenty of cash to increase the dividend.  When the dividend amount is increased, those owning the stock get a raise just for not selling!

Obviously CSX Corp. is appealing to growth and income investors for the long term!

Wall Street feels the same.  Now selling for around $29.70 a share, the mean analyst target price over the next year of market action is $32.39.  The short float is low too, which shows that few are willing to bet the share price will fall.

 



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