Investors looking to buy the best railroad stocks right now can consider CSX Corporation, Union Pacific, Kansas City Southern, and Norfolk Southern. Another railroad company, BNSF, gets a lot of press coverage for being part of Berkshire Hathaway. However, BNSF contributes only about 10% to Berkshire’s revenues.

For CSX, chemical shipments account for 20% of revenues, coal shipments account for 17% of revenues, intermodal containers contribute 15% of revenues, while automotive cargo makes up 10% of revenues. CSX reported its Q22020 earnings on July 22nd, 2020. Revenues were down 26% on a year-on-year basis to $2.25 billion. The automotive segment saw a drop of 72% in revenues while the coal segment went down by 48% on a year-on-year basis. Earnings per share was down to $0.65 per share from $1.08 in the same quarter the prior year. Revenues missed analyst estimates of around $2.32 billion while earnings per share just about beat estimates of $.0.64 per share.

Company CEO James Foote said, “Sequentially, the volume decline was the largest in CSX’s history and almost twice as severe as any quarter during the 2009 recession.” He further added, “Despite the challenging operating environment, the railroad continued to run at a high level. The operating team successfully implemented significant plan changes while maintaining fluidity and driving efficiencies across the railroad.”

Despite the negative results, CSX is considered to be among the best railroad stocks 2020 because of its fuel efficiency. The company leads US Class 1 railroad companies in fuel efficiency, something which is of increasing significance due to a shift towards an ESG-focused regime.

Union Pacific is one of the best cash generators in the industry and the only real competition to BNSF in the west. It is also a candidate among railroad stocks to buy. Another couple of companies, Trinity Industries and Kansas City Southern, have seen strong momentum with high 12-month returns. They are also options to consider for railroad stocks to buy now.

CSX Corporation (CSX)

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CSX is a leading rail freight transport company in America. It operates about 21000 miles of rail tracks across the eastern US as well as the Canadian provinces of Quebec and Ontario. CSX also has access to 70 strategic ocean, river, and lake port terminals spread out over its area of operation. CSX is known for its cost efficiency. It also has rights of way and a network of track which is impossible to replicate. CSX is a wide-moat company with bright prospects.

The 20-year monthly chart of CSX demonstrates the clear uptrend that the stock has been in over the last decade. In February 2020, the stock fell more than 25%. In April, it opened at a gap down from its March close and touched an important support level at 54, as denoted by the dotted red line.

This dotted red line is at an area of value as it is also close to the bottom of the long-term trend. The price, in April, has bounced back up by about 16% from this bottom. The first target now is the next resistance level at 76 and then the top of the long-term trend, at 88. Stop loss can be placed below the bottom of the long-term trend at around 50.

Positions taken at $63.82 with stop loss 23% below at $49. Short term investors put in a take profit order at $90 yielding a profit of 41%