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CSX Stock Gains 12.4% in a Year's Time: More Upside Ahead?

This story originally appeared on Zacks

Shares of CSX Corporation CSX have been exhibiting an upside on the bourses, gaining 12.4% in a year’s time, outperforming its industry’s 11.7% uptick.

– Zacks

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s delve into the reasons for this double-digit price gain and examine if there is a scope for further upside.

Driven by the uptick in the freight scene, CSX, currently carrying a Zacks Rank #3 (Hold), is benefiting primarily from higher export coal volumes, international intermodal shipments and favorable pricing. Evidently, total volumes rose 6% year over year in 2021, leading to an 18% uptick in total revenues.

CSX’s commitment to reward its shareholders even in the current uncertain times is encouraging. In February 2022, CSX announced a 7% hike in its quarterly dividend, taking the total to 10 cents per share. In 2021, CSX returned more than $3.7 billion to its shareholders through $2.9 billion of buybacks and above $800 million as dividends.

CSX’s liquidity position is also impressive. Its cash and cash equivalents stood at $2,316 million at the end of the fourth quarter of 2021, much higher than the current debt of $181 million, implying that CSX has sufficient cash to meet its current debt obligations. The current ratio (a measure of liquidity) at the end of the same period was 1.73, comparing favorably with its industry’s reading of 1.21.

With economic activities picking up and likely to gain a further pace in the coming days, freight demand is expected to continue its northward movement. This is likely to support growth at CSX as freight revenues and volumes are projected to improve further. That the future is bright for the stock is supported by the Zacks Consensus Estimate for 2022 earnings being revised 1.13% upward over the past 60 days.

Stocks to Consider

Investors interested in the Zacks Transportation  sector may consider Expeditors International of Washington EXPD and ArcBest Corporation ARCB.

Expeditors currently carries a Zacks Rank #2 (Buy). Upbeat airfreight revenues bolster EXPD. Like the first three quarters of 2021, we expect airfreight revenues to aid Expeditors’ fourth-quarter 2021 results (scheduled to be out on Feb 22, 2022) as well.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Expeditors have gained 14% in a year’s time. In May 2021, EXPD announced an 11.5% hike in its semi-annual cash dividend, taking the total to 58 cents per share. EXPD has an impressive record with respect to utilizing its shareholders’ money. The optimism surrounding the stock is evident from the 3.1% northbound revision of the Zacks Consensus Estimate for 2022 earnings over the past 60 days.

ArcBest currently sports a Zacks Rank #1. ARCB has a stellar surprise history. Its earnings outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 31.4%.

Shares of ArcBest have surged 56.4% in a year’s time. Improving freight conditions in the United States bode well for ARCB. Solid customer demand and higher market rates are supporting growth at ARCB.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CSX Corporation (CSX): Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
ArcBest Corporation (ARCB): Free Stock Analysis Report
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