The rails currently present a mixed picture for investors. On the bullish side, Donald Trump wants to spend on infrastructure, has a goal of bringing more manufacturing back to the United States, and is pro-coal. If all of this comes to fruition, then it will be good news for the rails. On the bearish side, United States rail volumes have been light, with total carloads declining 6.9% in the United States for the first 40 weeks of the year on a year-over-year basis. This could indicate a weakening underlying economy. Then again, as long as interest rates remain near record lows and borrowing is cheap, it’s unlikely (yet not impossible) to see a sudden crash. (See also, CSX Earnings Could Wake Up Sleepy Transports)

CSX Corporation (CSX) is certainly more bullish, or at least not so bearish. CSX now expects fourth-quarter earnings-per-share to come in “flat to slightly up” versus a previous expectation of “flat slightly down.” Based on macroeconomic conditions, CSX expects volumes to be “flat to up slightly” versus a previous expectation of “roughly flat.”  

CSX cited coal stabilization as the catalyst, seeing “sequential volume stabilization and is essentially flat in the fourth quarter to date.” Coal shipments declined 21% last quarter. Therefore, if coal shipments were to come in flat in the fourth quarter, it would be incredibly bullish. Even if that’s not the case, the best stocks are usually not the ones that are seeing everything go right with their related businesses, but the ones that are coming out of a long stretch of headwinds. If investors anticipate improvements with the business and its industry, they want in early, which is often how investors reap the biggest gains.

All that said, it’s not as if CSX is coming from the abyss. The stock has appreciated 21.68% over the past 12 months, which is in addition to a current dividend yield of 2.08%. 

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