Why Kansas City Southern Shares Will Chug Past $110

Does this analyst make a good case? Or is it just more noise from Wall Street?

May 16, 2014 at 10:12AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Kansas City Southern (NYSE:KSU) climbed 3% today after Bank of America upgraded the railroad operator from neutral to buy.

So what: Along with the upgrade, analyst Ken Hoexter planted a price target of $113 on the stock, representing about 14% worth of upside to yesterday's close. So while momentum traders might be turned off by KCS's price weakness over the past six months, Hoexter's call could reflect a sense on Wall Street that its growth prospects are too cheap to pass up.

Now what: According to Bank of America, KCS's risk and reward trade-off is rather attractive at this point. "KCS enjoys industry leading volume growth given its exposure to the rapidly growing Midwest to South Central U.S., as well as Mexico's ongoing industrialization (40% of its revenues are from Mexico)," said Hoexter. "KCS' revenues are driven mainly by Industrial, Chemical and Ag (and to a lesser extent Coal, Intermodal and Auto). Given its above industry average growth, KCS' shares typically trade at a 5-6 point premium to the other Class I rails." When you couple that upbeat outlook with KCS's still-sluggish stock price -- off about 20% from its 52-week highs -- it's tough to disagree with Bank of America's bullishness. 

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Brian Pacampara owns shares of Bank of America. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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