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Rail Stocks Continue to Climb the Hill as Analysts Upgrade Expectations

Rail Stocks Continue to Climb the Hill as Analysts Upgrade Expectations

Transportation companies like CSX Corporation (NASDAQ: CSX) are close to trading at 52-week highs. The trend in price has occurred alongside small analyst EPS revisions and an upgrade on August 31. On Monday, the price rose 2.32% and is eyeing establishing a new 52-week high.

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  • Total U.S. Rail traffic increased for the first time in 2020 last week on over 509,000 carloads and intermodal units. The 8.6% increase was the first year-over-year increase this year came as intermodal units rose 24.8%. The increase comes as many rail companies have been slow to ramp up their capacity and rates have risen sharply in different parts of the U.S.

    Since the March low, shares of CSX have risen steadily, only taking a brief pause during June. The result has carried the stock back near its 52-week high around $80. Quite a significant achievement for a transportation company in the middle of a recession.

    The share price of CSX stabilized quickly following the initial drop in price on September 3. The price trend has bucked the overall market trend over the past week and the price closed at a new multi-month high on Monday.

    The recent support allowed the price to stay within a price channel that has been developing since June. A price channel are parallel lines that are drawn across the highs and the lows over a period of time. The lines can be horizontal, downward or upward-sloping. In this case, it is an upward or bullish channel. The channel has formed because of a series of higher highs and higher lows that began to form following the June 26 low.

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  • The near-term expectation is a retest of the $80 resistance that also aligns with the upper channel. However, the expectation is for the trend to continue through the resistance in the coming weeks to months.

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