As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.
Today, I'll look at CSX (CSX +0.25%). The railroad company got off-track in 2012 because of weak conditions in commodity demand, but CSX hopes that improving global economic conditions will translate into more profits for the company. Below, you'll learn more about CSX's prospects for 2013.
Stats on CSX
|
| |
|---|---|
|
Average Stock Target Price |
$24.32 |
|
Full-Year 2012 EPS Estimate |
$1.75 |
|
Full-Year 2013 EPS Estimate |
$1.86 |
|
Full-Year 2012 Sales Growth Estimate |
0% |
|
Full-Year 2013 Sales Growth Estimate |
2.5% |
|
Forward P/E |
11.0 |
Source: Yahoo Finance.
Will CSX get back on track in 2013?
Analysts have a fairly positive outlook on CSX's prospects in 2013. The current target price for the stock is almost 20% higher than where it trades now, and earnings growth is seen accelerating slightly to about a 6% clip in 2013 compared to about 4% to 5% in 2012.
Unfortunately, the same factors that have held CSX back seem unlikely to reverse themselves in the near future. Both CSX and Norfolk Southern (NSC 0.38%) are particularly reliant on coal transport for a major part of their revenue, and with utilities Exelon (EXC +1.64%) and Duke Energy (DUK +1.32%) having closed down most of their coal-fired electricity generation plants in favor of such alternatives as nuclear and gas-fired plants, CSX can't count on coal demand returning quickly.
The big question is whether CSX can tap more effectively into rising prospects for transporting energy products. Union Pacific (UNP +0.22%) has had great success boosting its revenue by shipping petroleum products by rail, and with major plays like the Bakken lacking major pipeline assets, rail transport is a quick and relatively easy solution to getting those products to market.
CSX has ample opportunities to improve itself in 2013. If it takes action and if the economy cooperates, then CSX offers a reasonable bargain with some growth potential.
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