Buy Norfolk Southern For Safe Dividend Yield, Cheap Valuations And Expected Growth
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: The article has been written by Qineqt's Industrials Analyst. Qineqt is not receiving compensation for it (other than from Seeking Alpha). Qineqt has no business relationship with any company whose stock is mentioned in this article.
Many railroad stocks are trading near their 52-week highs. In some cases, it is because of massive expansionary plans, case in point being Kansas City Southern (KSU). For others, the run up in stocks is a result of efficient future cost cutting plans being anticipated. Norfolk Southern Corp. (NSC) is a prime example in this case. Whatever the case may be, railroads have experienced some pent-up demand in the form of increased demand for cars, lumber (that is of course because of the gradual housing recovery), and growth in intermodal mode of transportation. The major damage has been done by coal and grain carloads, which has offset any gains that had been made. Although a decline in grain carload has been majorly due to the drought, it is the coal demand that has given much grief to railroad investors. Many perceive the reason for declining coal demand to be secular rather than cyclical. However, repercussions of falling natural gas prices on railroad businesses have already been discussed in our industry analysis, so we will not go into much detail on the matter. READ FULL ARTICLE HERE
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