Market Overview

Can CSX Railroad's Run Continue?

Can CSX Railroad's Run Continue?
Related CSX
Stifel Rides The Rails, Initiates Seven Stocks
Goldman Sachs Upgrades CSX, Downgrades Canadian National In Second Look At Rail Stocks
Let This Stock Chug Along (Seeking Alpha)

CSX Corporation (NYSE: CSX) shares are ripping higher after casually holding uptrend line support during the most recent market volatility a couple of weeks ago.

Looking at the whole picture, do the fundamentals justify the technical strength?

What The Bulls See...

• An enterprise value of $43.7 billion that trumps a market capitalization of $35.4 billion

• A price-to-sales ratio of 2.81

• 14.89 percent net profit margins that spin off more than $700 million in annual levered free cash flow

• Decent balance sheet metrics with a debt-to-equity ratio of 86.31 percent and a current ratio of 1.2

• A dividend yield of 1.8 percent

What The Bears See...

• A P/E of 17 compared to estimated 2015 revenue and EPS growth of 4.3 percent and 13.1 percent, respectively

• A price-to-book ratio of 3.16

The Technical Take

As technicians note, CSX sports third wave Fibonacci projected resistance at $35.52. Friday's close above that level could nullify the technicians' wave count and open up more upside potential. 

Related Link: Does Union Pacific's Recent Action Support The 'Econ Bulls'?

Below $32.06, however, the next level of support for CSX comes in at the October lows at $29.75. Above the $35.52 projection, the next upside target wouldn't come into play until between $45 and $48.


The question appears to be: Will euphoric market conditions give the bulls the belief needed to continue the rally?

As a matter of discipline, it may be a good idea to buy only on a dip to identifiable support at $32.06 or $29.75. The technicals are so strong, in fact, that aggressively shorting CSX is only for the most nimble of traders.

Stock chart: 
Stock chart

Posted-In: csx technicals RailroadTechnicals Trading Ideas Best of Benzinga


Related Articles (CSX)

View Comments and Join the Discussion!