CSX Corp (CSX)

The fundamentals of the railroads in North America are about the strongest of just about any subsector. The only problem is the valuations. They have done exceptionally well over multiple years, and the majority of them are in the mid-20s valuation.

Does not see any problems with the chart. Has been in an uptrend since beginning of 2013. There is nothing wrong with it technically. Acquire at the bottom of the trend line and reduce at the top.

Coal oriented, so earnings have lagged, but only back a year. It is starting to come out of that and it looks like they are going to show better earnings growth at a much cheaper valuation than Canadian National (CNR-T) or Canadian Pacific (CP-T).

The rails are still in play as far as he is concerned. They want to work higher. Chart shows an elevated base in 2012, and then it moves higher. The transportation section has corrected down to the 200 day, and now we are rallying back. There is no sign of a top as yet.

He is a big believer in the railroads and transport. This has the lowest valuation and he is hopeful that better things will happen as the coal demand improves.

(Top Pick Aug 1/13, 23.86%) There was still skepticism on the valuation. Last quarter was challenging because of the weather and increased costs, but they did a good job of offsetting the coal headwind. There is still a lot of run room on the intermodal side so she continues to own it and sees good upside on the stock. It’s still a pretty decent valuation.

Valued less expensively than Canadian rails. Has no problem with it. He has no exposure to rails right now. It is slower growth than Canadian rails.

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.

Likes railway industry. His choice is CNR because it is the most profitable and best run. But Canadian railroads trade at a premium over US ones. He would go with the better company.

Stumbled a little because operating ratio stalled out around 70% instead of getting down to 60%. Feels the dividend is sustainable. Faced with headwinds because about 20% of their business is derived from coal shipments, which have really dried up. Have replaced a lot of that through other means, but they still have the offset of coal.

Rail sector is a good place to be involved in. Not his keen on this company’s overall assets, as compared to some of the others. His favourite is Norfolk Southern (NSC-N) followed by Union Pacific (UNP-N). The variation between individual rails isn’t that great. You can own any of these rails.

(A Top Pick March 26/13. Up 22.12%.) Have announced that weather will impact their 1^st quarter, but this affects all the rails. The stock didn’t go down so he takes this is a good sign. Has decent growth.

Has been one of his favourite railroads. Very solid management team. Stock had a big run, corrected and came back down to the 200 day moving average giving you a good opportunity to Buy. Thinks the coal headwind is understood but doesn’t mean there is not additional downside. If you believe that the US economy is going to continually grind forward over the next 2 years, this rail moves all kinds of housing related products, auto products and with a cheaper Cdn$ they bring lumber down from Canada.

(A Top Pick June 19/13. Up 13.4%.) An Eastern based railroad. There are 7 Class 1 railroads in the US. In spite of their struggling coal franchise, they have good growth from agriculture, the industrial side, oil and intermodal. They are committed to raising their dividend. Trading cheaper than some of the Canadian rails.

An industrial stock that does very well at this time of year. Chart shows a strong upper trend but has been in the trading pattern for the last little while. Seasonality is positive this time of year, right through until the middle of April. As you get close to the middle of April, you may want to re-examine it.