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Has Potential Upside Gone Missing in Transport Stocks? (CSX, NSC, UNP, CP, JBHT, LSTR, DSX, DRYS, EXM, FRO)

Paul Ausick — Thu, 01 Dec 2011 19:30:38 +0000

Railroads and trucking companies have, for the most part, seen share prices rise over the past 12 months, while ocean-going shippers have taken a severe beating. Of four railroads, CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC), Union Pacific Corp. (NYSE: UNP), and Canadian Pacific Railway Ltd. (NYSE: CP), only the last has failed to see its share price rise in the past year. Truckers J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT) and Land Star System, Inc. (NASDAQ: LSTR) have both gained more than 20%. Shipping companies Diana Shipping Inc. (NYSE: DSX), DryShips Inc. (NASDAQ: DRYS), Excel Maritime Carriers Ltd. (NYSE: EXM), and Frontline Ltd. (NYSE: FRO) are all down between -45% and nearly -90%.

To start with the worst, Frontline is down more than -88% for the year, and its median target price has dropped to $6.00 from $7.25 in late October. At today’s share price of $2.98, the potential upside is slightly more than 100%. DryShips is not much better, with a lower target price of $5.00. At today’s price of $2.37, the implied gain is nearly 111%. Neither Excel nor Diana is as bad, but neither is likely to achieve anywhere near their implied gains of 63% and 46%, respectively. The shipping business has too many ships sailing around at unprofitable day rates. Until that situation resolves itself — not likely until 2013 — anything that resembles value in the shipping business is likely a mirage.

Railroads are faring better because rail traffic is up. The Association of American Railroads reported this morning that November carload traffic on US railroads grew 4% compared with November 2010. Intermodal traffic (containers) grew by 3.7% year-over-year. The largest increase came in motor vehicle carloads, which grew by 42% compared with last year and petroleum product carloads which grew by more than 28%.

Another large gain, more than 30%, came in carloads of crushed stone, sand, and gravel. Because beach sand is the most common material used in hydraulic fracturing of oil and gas wells, it’s probably a reasonable assumption to give the drilling industry credit for the increase.

Of the four railroads, Union Pacific and Norfolk Southern have both had target price boosts since late October. Union Pacific’s median target price is $114.00, up from $110.00. At a current price of $102.70, the potential upside in UP’s stock is 11%. The company’s dividend yield of 2.4% is also tied with Norfolk Southern’s for the best in the group.

Norfolk Southern’s median target price is $85.50, up from $82.00. At a current price of $74.90, the stock has a potential upside of 14.5%. With a slightly higher implied gain and an equal dividend yield, Norfolk Southern might be the best bet among the railroads.

In trucking, J.B. Hunt’s median target price fell from $49.00 to $48.00, but that was quite likely due to two brokers dropping coverage. At today’s price of $$45.40, the potential upside for the stock is just 5.7%. The company pays a dividend yield of 1.2%.

Landstar’s median target price is $52.00, up half a dollar from late October, and again likely due to a drop in the number of brokers covering the stock. At today’s price of $45.90, the potential upside for the stock is 13.3%. Landstar pays a dividend yield of 0.5%. Earlier this week, Landstar was downgraded from ‘buy’ to ‘neutral’ at SunTrust.

Of the two trucking companies, neither has a clear edge over the other. Hunt is more fully valued, but the company reported record results in the third quarter. If Hunt can do that again, then the current target price will be left way behind. Hunt’s strength in intermodal transportation could easily make that happen.

Of all ten stocks reviewed here, Norfolk Southern may be the safest bet, but J.B. Hunt may add more significant growth potential to its relatively limited upside potential.

Paul Ausick

Filed under: Analyst Calls, Transports Tagged: CP, CSX, DRYS, DSX, EXM, FRO, JBHT, LSTR, NSC, UNP

Top Active Trader Alert Stocks (ASML, CP, HMC, MNTA, PCRA, YHOO)

Mike Sauter — Mon, 31 Oct 2011 12:52:06 +0000

Active traders and day traders have many stocks to choose from this Monday morning. We are tracking news and moves in shares of ASML Holding (NASDAQ: ASML), Canadian Pacific Railway Limited (NYSE: CP), Honda Motor Co., Ltd. (NYSE: HMC), Momenta Pharmaceuticals (NASDAQ: MNTA), Pacira Pharmaceuticals (NASDAQ: PCRA), and Yahoo! Inc. (NASDAQ: YHOO).

ASML Holding (NASDAQ: ASML) is down nearly 3% before market open to $42.28, relative to a 52-week range of $30.65 – $45.92.

Canadian Pacific Railway Limited (NYSE: CP) is up 5% premarket to $67.82, relative to a 52-week range of $44.74 – $69.92.

Honda Motor Co., Ltd. (NYSE: HMC) is down 7.5% premarket to $30.10, within a 52-week range of $28.04 – $44.56.

Momenta Pharmaceuticals (NASDAQ: MNTA) is up 16.4% before market open to $14.25, relative to a 52-week range of $10.15 – $21.00.

Pacira Pharmaceuticals (NASDAQ: PCRA) is up 12% premarket to $11.40, relative to a 52-week range of $6.16 – $15.34.

Yahoo! Inc. (NASDAQ: YHOO) is down 3.2% premarket to $16.03, relative to a 52-week range of $11.09 – $18.84.

Filed under: General Tagged: ASML, CP, HMC, MNTA, PCRA, YHOO

Expected Price Gains in Transportation Stocks (CSX, NSC, UNP, CP, DSX, DRYS, EXM, FRO, JBHT, LSTR)

Paul Ausick — Thu, 27 Oct 2011 18:06:38 +0000

Transportation stocks get a lot more attention as economic bellwethers than they do as market participants. Railroads, ships, and trucks are not particularly glamorous, and the industries are so entrenched that they most resemble utility stocks.

The companies included in today’s overview are CSX Corp. (NYSE: CSX), Norfolk Southern Corp. (NYSE: NSC), Union Pacific Corp. (NYSE: UNP), Canadian Pacific Railway Ltd. (NYSE: CP), Diana Shipping Inc. (NYSE: DSX), DryShips, Inc. (NASDAQ: DRYS), Excel Maritime Carriers Ltd. (NYSE: EXM), Frontline Ltd. (NYSE: FRO), JB Hunt Transport Services Inc. (NASDAQ: JBHT), and LandStar System Inc. (NASDAQ: LSTR).

Of the ten stocks we’re looking at today, only one trades more than 10 million shares a day and most of the others trade less than 3 million. On the surface, it would seem that all these stocks would more or less trade in parallel. In practice, though, railroads and trucking companies are faring far better than sea-borne shippers. Railroads are hauling more coal, and trucking companies are having trouble meeting demand for their services. Shippers overbuilt their fleets, and the resulting collapse in day rates has been punishing for their top and bottom lines.

Cargo traffic is closely watched at this time of year as a predictor of holiday retail sales. Typically, ocean container shipping headed to the US tips the coming strength of retail sales. This year, container shipments have been somewhat lower, and this month’s totals will really tell the tale. Rail and truck traffic has been strong though, although the shortage of available trucks is diverting more container (intermodal) traffic to the railroads.

All data from Yahoo! Finance, and share prices were collected shortly before noon today.

CSX Corp. (NYSE: CSX) has a median target price of $27.00 from 24 brokers. Shares are trading today at $22.66, for an implied gain of $4.34, or 19%. CSX’s forward P/E is 11.73 and the company pays a dividend yield of 2.3%. The stock’s 52-week trading range is $17.69-$27.06, and at today’s price that’s about 28% above its 52-week low, posted earlier this morning, and 16% below the 52-week high. CSX met analysts’ expectations when it reported third quarter earnings about 10 days ago. The company noted a 15% jump in intermodal freight revenue, although volume was essentially unchanged from the same period a year ago. CSX said at the time that it does not expect significant growth in the US, but neither does it predict a double-dip recession.

Norfolk Southern Corp. (NYSE: NSC) has a median target price of $82.00 from 23 brokers. Shares are trading today at $74.74, for an implied gain of $7.26, or 10%. Norfolk Southern’s forward P/E is 12.91 and the company pays a dividend yield of 2.5%. The stock’s 52-week trading range is $57.57-$78.40, and at today’s price that’s about 30% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. Norfolk Southern hauled 23% more coal in the third quarter than it did a year ago, and its intermodal traffic volume increased by 13%. Like CSX, the company expects modest economic growth in the US going forward. The company’s implied stock price gain is about half that of CSX, but with both coal and intermodal traffic up and growing, Norfolk Southern is more likely to bust through its current target price than the other railroads we’ve looked at today.

Union Pacific Corp. (NYSE: UNP) has a median target price of $110.00 from 25 brokers. Shares are trading today at $102.35, for an implied gain of $7.65, or 7.5%. Union Pacific’s forward P/E is 13.15 and the company pays a dividend yield of 2%. The stock’s 52-week trading range is $77.73-$107.89, and at today’s price that’s about 32% above its 52-week low, posted earlier this morning, and 5% below the 52-week high. Union Pacific posted third quarter earnings a week ago, and its international intermodal shipments were down -12% year-over-year. That implies that retailers are buying less in anticipation of a slower holiday shopping season.

Filed under: Analyst Calls, International Markets, Transports Tagged: CP, CSX, DRYS, DSX, EXM, FRO, JBHT, LSTR, NSC, UNP

Top Analyst Upgrades & Downgrades (AGNC, NLY, CAB, CP, CIM, EDMC, FDX, FSLR, GS, HTS, IVR, JOSB, LQDT, MDR, ODFL, RIMM, SKS, TD, UPS)

Administrator — Fri, 02 Sep 2011 12:26:33 +0000

These are some of this Friday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

American Capital Agency Corp. (NASDAQ: AGNC) Cut to Neutral at BofA/ML.
Annaly Capital Management, Inc. (NYSE: NLY) Cut to Neutral at BofA/ML.
Cabela’s, Inc. (NYSE: CAB) named as Bull of the Day at Zacks.
Canadian Pacific Railway Limited (NYSE: CP) Cut to Neutral at Credit Suisse.
Chimera Investment Corporation (NYSE: CIM) Cut to Neutral at BofA/ML.
Education Management Corporation (NASDAQ: EDMC) Raised to Equal-Weight at Morgan Stanley.
FedEx Corporation (NYSE: FDX) Cut to Neutral at Credit Suisse.
First Solar Inc. (NASDAQ: FSLR) Reiterated Buy with $140 target at Argus.
Goldman Sachs Group. Inc. (NYSE: GS) Maintained Outperform but cut estimates by Credit Suisse.
Hatteras Financial Corp (NYSE: HTS) Cut to Neutral at BofA/ML.
Invesco Mortgage Capital Inc. (NYSE: IVR) Cut to Neutral at BofA/ML.
Jos. A Bank Clothiers Inc. (NASDAQ: JOSB) Called the value stock of the day at Zacks.
Liquidity Services, Inc. (NASDAQ: LQDT) Raised to Outperform at Oppenheimer.
McDermott International (NYSE: MDR) named as Bear of the Day at Zacks.
Old Dominion Freight Line Inc. (NASDAQ: ODFL) Raised to Outperform at Credit Suisse.
Research in Motion Ltd. (NASDAQ: RIMM) Maintained Neutral but raised target to $37 from $25 at BofA/ML.
Saks Inc. (NYSE: SKS) Maintained Buy with $14 target at Argus.
Toronto Dominion Bank (NYSE: TD) Raised to Outperform at Credit Suisse.
United Parcel Service, Inc. (NYSE: UPS) Raised to Outperform at Credit Suisse.

JON C. OGG

Filed under: Analyst Calls Tagged: AGNC, CAB, CIM, CP, EDMC, FDX, FSLR, GS, HTS, IVR, JOSB, LQDT, MDR, NLY, ODFL, RIMM, SKS, TD, UPS

Top Analyst Upgrades & Downgrades (AAPL, T, CP, CSX, GE, JLL, NFLX, JWN, RIMM, SNDK, UAL, UTI, VMW, ZION)

Administrator — Tue, 22 Mar 2011 12:24:50 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Tuesday morning.

Apple Inc. (NASDAQ: AAPL) Maintained Outperform at Credit Suisse; maintained Buy at Argus.
AT&T Inc. (NYSE: T) Reiterated Buy at Argus.
Canadian Pacific Railway Limited (NYSE: CP) Cut to Underperform at BofA/ML.
CSX Corp. (NYSE: CSX) Raised to Overweight at Barclays.
General Electric Co. (NYSE: GE) Reiterated Buy at Argus.
Jones Lang LaSalle (NYSE: JLL) Raised to Outperform as Bull of the Day at Zacks.
Netflix, Inc. (NASDAQ: NFLX) Raised to Outperform with $280 target at Credit Suisse.
Nordstrom Inc. (NYSE: JWN) Raised to Buy with $49 target at Goldman Sachs.
Research-in-Motion Ltd. (NASDAQ: RIMM) Maintained Outperform ahead of earnings at Credit Suisse.
SanDisk Corporation (NASDAQ: SNDK) Maintained Buy at Gleacher & Co.
United Continental Holdings (NYSE: UAL) Maintained Buy but cut estimates/target at Soleil.
Universal Technical Institute (NYSE: UTI) maintained Underperform as Bear of the Day at Zacks.
VMware Inc. (NYSE: VMW) Raised to Buy at BofA/ML.
Zions Bancorporation (NASDAQ: ZION) Raised to Outperform at Credit Suisse.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: AAPL, CP, CSX, GE, JLL, JWN, NFLX, RIMM, SNDK, T, UAL, UTI, VMW, ZION

Top Analyst Upgrades and Downgrades (AA, CP, ENDP, GE, GS, MS, PBR, SYY, AAPL)

Administrator — Thu, 30 Dec 2010 13:21:54 +0000

The research calls are running light this week with many firms still on skeleton crews. These are some of this Thursday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Alcoa Inc. (NYSE: AA) Reiterated Buy and $18 target at Argus.
Canadian Pacific Railway (NYSE: CP) Maintained Neutral but cut estimates at BofA/ML.
Endo Pharmaceuticals Holdings Inc. (NASDAQ: ENDP) Reiterated Buy and Raised target to $43 at BofA/ML.
General Electric Co. (NYSE: GE) Maintained Neutral at Zacks.
Goldman Sachs Group. Inc. (NYSE: GS) Maintained Outperform with $190 target but cut estimates at Credit Suisse.
Morgan Stanley (NYSE: MS) Maintained Outperform with $35 target but cut estimates at Credit Suisse.
Petroleo Brasileiro (NYSE: PBR) Maintained Neutral and $43 target at Credit Suisse.
SYSCO Corporation (NYSE: SYY) Maintained Hold but raised 2011-2012 estimates at Argus.

This week we began the year-end crunch over future valuations for 2011 and expectations ahead. We took a look at the full 360-degree review for Apple Inc. (NASDAQ: AAPL) to evaluate whether it can live up to expectations as a stock in 2011 and beyond. We also made a biotech review for the big biotechs with the most upside in 2011 based upon analyst expectations and more.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: AA, AAPL, CP, ENDP, GE, GS, MS, PBR, SYY

Rail Dividends Trending Higher, 2011 Outlook (UNP, GSH, NSC, CSX, CNI, CP, BRK-A, BRK-B)

Administrator — Thu, 18 Nov 2010 17:44:49 +0000

It turns out that Warren Buffett was right about railroads. They are part of a country’s fabric, and their place as a relatively low-cost shipper is well-fixed in a country’s infrastructure. Now that view is paying off in the form of dividends. Union Pacific Corp. (NYSE: UNP) has announced that the company is raising its quarterly dividend for a second time this year to $0.38/share. This lifts the company’s yield from 1.4% to 1.7%, and raises Union Pacific’s yield from the bottom of six railway companies to somewhere in the middle.

Along with Union Pacific, we also looked at Guangshen Railway Co. Ltd. (NYSE: GSH), Norfolk Southern Co. (NYSE: NSC), CSX Corp. (NYSE: CSX), Canadian National Railway Co. (NYSE: CNI), and Canadian Pacific Railway Ltd. (NYSE: CP). Here’s how they stack up on the basis of dividend yield:

Guangshen Railway pays $0.51 for a 2.5% yield;
Norfolk Southern pays $1.44 for a 2.3% yield;
CSX Corp. pays $1.04 for a 1.7% yield;
Canadian National pays $1.07 for a 1.7% yield;
Union Pacific pays $1.52 for a 1.7% yield;
Canadian Pacific pays $1.05 for a 1.6% yield.

There is an obvious here… more dividend raises could be on the way, if the railroads want to maintain current investor yields going forward.

Buffett’s own Burlington Northern Railway has boosted shares in Berkshire Hathaway Inc. (NYSE: BRK-A; BRK-B), but the company does not pay dividends.

Not everyone sees a silver lining in railroad stocks. Goldman Sachs today downgraded Norfolk Southern from ‘Hold’ to ‘Sell’ and lowered the company’s target share price from $62 to $59. The stock is trading at over $61/share so far today. Goldman cited higher costs, smaller price increases, a negative view on coal shipments from Appalachia, and declining intermodal traffic as reasons for the downgrade. Goldman could be right, but strength in railroad stocks has been building and all the stocks we’ve looked at are priced well below their mean targets.

Paul Ausick

Filed under: Buffett, Dividend, Shareholder Issues, Transports Tagged: BRK-A, BRK-B, CNI, CP, CSX, GSH, NSC, UNP

Top Analyst Upgrades and Downgrades (CP, CME, GOOG, GDOT, ICE, NDAQ, N, NVTL, NYX, CRM, SNN, SMSI, SYMC, WFMI)

Administrator — Fri, 15 Oct 2010 12:01:45 +0000

These are some of this Friday’s key analyst upgrades, downgrades, and initiations seen in Wall Street research calls.

Canadian Pacific Railway (NYSE: CP) Cut to Market Perform at Raymond James.
CME Group Inc. (NYSE: CME) Started as Market Perform at Wells Fargo.
Google Inc. (NASDAQ: GOOG) Maintained Buy and price target Raised to $700 from $625 at Goldman Sachs.
Green Dot Corporation (NYSE: GDOT) Started as Outperform at Macquarie.
IntercontinentalExchange (NYSE: ICE) Started as Outperform at Wells Fargo.
NASDAQ OMX Group (NASDAQ: NDAQ) Started as Market Perform at Wells Fargo.
NetSuite Inc. (NYSE: N) Started as Market Perform at BMO.
Novatel Wireless Inc. (NASDAQ: NVTL) Raised to Buy at Jefferies (as Verizon iPad beneficiary).
NYSE Euronext (NYSE: NYX) Started as Market Perform at Wells Fargo.
Salesforce.com (NYSE: CRM) Started as Outperform at BMO.
Smith & Nephew plc (NYSE: SNN) Cut to Neutral at BNP Paribas.
Smith Micro Software Inc. (NASDAQ: SMSI) Raised to Overweight at JPMorgan (as Verizon iPad beneficiary).
Symantec Corporation (NASDAQ: SYMC) Started as Outperform at William Blair.
Whole Foods Market, Inc. (NASDAQ: WFMI) Raised to Buy at Jefferies.

JON C. OGG

Filed under: General Tagged: CME, CP, CRM, GDOT, GOOG, ICE, N, NDAQ, NVTL, NYX, SMSI, SNN, SYMC, WFMI

Top Analyst Downgrades (AGO, CP, KOF, GENZ, SHAW)

247wallst — Mon, 31 Aug 2009 12:02:37 +0000

These are some of the top early-bird analyst downgrades and cautious research calls we have seen from Wall Street analysts early this Monday morning:

Assured Guaranty (AGO) Cut to Neutral at UBS.
Canadian Pacific Railway (CP) Cut to Neutral at UBS.
Coca-Cola Femsa (KOF) Cut to Sell at UBS.
Genzyme (GENZ) Cut to Neutral at Baird.
Shaw Group (NYSE: SHAW) Cut to Neutral at JPMorgan.

JON C. OGG

Posted in Analyst Calls Tagged: AGO, CP, GENZ, KOF, SHAW

Railroads: Short Sellers Versus Buffett & Gates (UNP, NSC, CP, BNI, CNI, CSX, KSU)

247wallst — Tue, 22 May 2007 13:30:54 +0000

Since Warren Buffett and Bill Gates, plus many others now, have gone after more railroad holdings, we thought it would be interesting to see how short sellers are acting in the names. Supposedly you can now make money betting against Warren Buffett these days, but that all depends on YOUR timing versus HIS. If you think that Bill Gates’ Cascade investment vehicle doesn’t have some foresight into issues 3 to 6 months ahead of time, well I won’t say it. So here is how the short selling looks in the railroads from April to May

STOCK (Ticker)             MAY07 APR07 Change
Union Pacific (UNP)       4.41M    3.91M    12.8%
Burlington North (BNI) 6.19M    5.8M       6.1%
Canadian Nat’l (CNI)       1.79M 1.40M    28.2%
CSX Corp. (CSX)             29.27M 27.97M 4.6%
Canadian Pac. (CP)       1.30M 1.06M       22.2%

lower short interest….

Norfolk Southern (NSC) 5.47M 7.93M -31%
Kansas City So. (KSU) 5.30M 6.43M -17.6%

NSC was Buffett’s top holding in the sector, and CNI was Gates’ top holding in the rails. Both BNI and UNP were Buffett’s other holdings in the sector.

Jon C. Ogg
May 22, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.