Jefferies Q2 Preview on Airfreight & Surface Transportation (CNI, CP, CNX, NSC, UNP)
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Rating Summary:
9 Buy, 2 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 13 | New: 13
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Jefferies Q2 Preview on Airfreight & Surface Transportation
Analyst, Peter Nesvold, said, "One reason why we like the rails is that they are so deeply out of favor. Investor sentiment matters in picking stocks! Clearly, we all know about the headwinds that coal has been facing over the last several quarters. And yes, coal is the largest and most profitable part of the rails’ earnings power....But the rails are not coal stocks."
"Long term, the best names in Airfreight & Surface Transportation have been the Class I rails: the share prices of CNI, CP, CSX, NSC, and UNP have compounded returns at 14%, the best across transports and more than 4x the market’s return. We think the rails continue to be the best place to hide out in what seems to be a directionless market...For long-only investors who are first focused on not allowing transports to be a detractor vs. S&P 500 performance, Union Pacific probably remains the easist name to own."
"In terms of stock-by-stock performance during the first half of 2012, only six of the 20 transport names under our coverage have outperformed the S&P 500 so far this year. Even among these half-dozen, two — XPO Logistics (NYSE: XPO) and FreightCar America (Nasdaq: RAIL) — arugably are too small or illiquid for many investors. Two other companies — FedEx (NYSE: FDX) and UTi Worldwide (Nasdaq: UTIW) — are engaging in “self-help” restructuring programs. That leaves JB Hunt (Nasdaq: JBHT) and Union Pacific (NYSE: UNP) as the only large-cap, growthy names in our coverage that outperformed the market in 1H:12."
For Canadian National (NYSE: CNI)(Underperform), Jefferies Q2 EPS estimate is C$1.43.
Canadian Pacific (NYSE: CP)(Hold), Q2 EPS estimate is C$0.85.
CSX Corp (NYSE: CNX)(Buy), Q2 EPS estimate is $0.49.
Norfolk Southern (NYSE: NSC)(Hold), Q2 EPS estimate is $1.59.
Union Pacific (NYSE: UNP)(Buy), Q2 EPS estimate is $1.92. Price target raised from $129 to $133.
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Analyst, Peter Nesvold, said, "One reason why we like the rails is that they are so deeply out of favor. Investor sentiment matters in picking stocks! Clearly, we all know about the headwinds that coal has been facing over the last several quarters. And yes, coal is the largest and most profitable part of the rails’ earnings power....But the rails are not coal stocks."
"Long term, the best names in Airfreight & Surface Transportation have been the Class I rails: the share prices of CNI, CP, CSX, NSC, and UNP have compounded returns at 14%, the best across transports and more than 4x the market’s return. We think the rails continue to be the best place to hide out in what seems to be a directionless market...For long-only investors who are first focused on not allowing transports to be a detractor vs. S&P 500 performance, Union Pacific probably remains the easist name to own."
"In terms of stock-by-stock performance during the first half of 2012, only six of the 20 transport names under our coverage have outperformed the S&P 500 so far this year. Even among these half-dozen, two — XPO Logistics (NYSE: XPO) and FreightCar America (Nasdaq: RAIL) — arugably are too small or illiquid for many investors. Two other companies — FedEx (NYSE: FDX) and UTi Worldwide (Nasdaq: UTIW) — are engaging in “self-help” restructuring programs. That leaves JB Hunt (Nasdaq: JBHT) and Union Pacific (NYSE: UNP) as the only large-cap, growthy names in our coverage that outperformed the market in 1H:12."
For Canadian National (NYSE: CNI)(Underperform), Jefferies Q2 EPS estimate is C$1.43.
Canadian Pacific (NYSE: CP)(Hold), Q2 EPS estimate is C$0.85.
CSX Corp (NYSE: CNX)(Buy), Q2 EPS estimate is $0.49.
Norfolk Southern (NYSE: NSC)(Hold), Q2 EPS estimate is $1.59.
Union Pacific (NYSE: UNP)(Buy), Q2 EPS estimate is $1.92. Price target raised from $129 to $133.
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