With coal prices spiking worldwide due to lack of supply, and fertilizers, ethanol and metals are all still strong, the rails transportation business is a good one right now, Ward said. And that worldwide demand is offsetting any modest move in the dollar. Sure, there are weaker segments – think autos and housing – but CSX’s portfolio is diversified, providing cushion where necessary.
Oddly, though, CSX’s stock is down even though the company just raised its guidance. The operating-income-growth rate was bumped up to 15% to 20% a year from 13% to 15%. Earnings-per-share growth is expected to climb 20% to 25% rather than 18% to 21%. Pricing, and this is where those contracts come in, is expected to be up 6% year over year.
If anything, consider the pullback in CSX a great buying opportunity.
“Rails, still a place to be,” Cramer said. “Amazing, given the fact that everything else is so weak.”
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