Everywhere I have looked lately, I have seen references to the historic nature of this year’s markets – and I have seen and heard people speak about their choices for stocks that are likely to perform – or continue to perform – at historic levels.
As a student of history, I know that railroads engineered the Industrial Revolution of the 19th and 20th centuries. Other technological developments surpassed the railroads in some areas, and they have had their difficult times, but railroads have continued to drive the economy.
Consequently, it seemed natural for me to look for a railroad that seemed to be positioned to lead or help drive industrial innovation in this century. Such a railroad, it seemed to me, would be a good investment.
In the course of my research, though, I found that it is not easy to narrow one’s choices in the railroad segment. To my mostly untrained eye, they all seem to be about the same, capable of delivering as promised, but there really seemed to be no way to differentiate between them.
Then an option that was worth exploring seemed to fall into my lap. I happened to hear economist Ben Stein mention CSX Corporation (CSX, Financial), the parent company for CSX Transportation, as his pick for a solid, likely history maker, and I started tracking down all the articles on the company that I could find.
To me, the Jacksonville, Florida-based company (one of three Class 1 railroads serving the Eastern seaboard as well as two Canadian provinces) looks like a marvelous investment.
At $30.91 a share, it isn’t quite as marvelous as it would have been if an investor bought shares in February 1990 at its then-$2.86 a share asking price and still had them in his portfolio. But, with only a couple of brief downturns, CSX’s price has been rising since November 2012, when shares were selling for $19.84.
Its revenue has never been higher. Neither has its net income.
Depending upon how one views the price-to-earnings ratio, CSX’s stock may be considered overvalued. But it has remained nearly constant at its present 17.3 level for nearly five years.
GuruFocus gives CSX a 7/10 rating for its financial strength and an 8/10 ranking for its profitability.
Â
Â
