CSX Corporation: 6 Highs in One Month Makes CSX Calls Smart

It is a beautiful Tuesday Morning and I am excited about the opportunities that this day presents to make money by trading stock options. Much of my option alerts in the last couple of weeks have been focused on making options trades based on what I can decode from technical analysis. Technical analysis refers to the explanation of those squiggly lines on the charts in my recent posts.

However, in today’s piece, I will revisit the world of fundamental analysis as I explore the stock and options of CSX Corporation (NYSE:CSX). CSX Corporation with its market capitalization of $35.25B is a transportation supplier. The Company provides rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers.

Why CSX Corporation Caught My Attention

CSX Calls

The chart above shows how shares of CXS have traded in the last one year as the stock trades northbound without wasting time on the southern slope. From the chart, you can observe that the stock has an established trendline support for the bullish ascent and you can easily calculate that the stock has gained more than 32.73% in the last one year.

Interestingly, the stock is trading above its 20, 50 and 200-day moving averages and the stock has recorded 6 new highs in the last one month. In fact, shares of CSX Corporation have had an impressive bullish run today as the stock makes a new 52-week high of $35.50. More impressive is the fact that the stock has an RSI of 68.33, which suggests that the buying action on the stock has more room for expansion.

Why is CSX Surging in Recent Times?

One of the major reasons behind the bullish momentum being recorded in shares of CSX is the impressive third quarter (Q3 2014) results that the company released about two weeks ago. Highlights of the third quarter results are presented below:

CSX reported earnings of $509M or $0.51 per share to mark an 11% increase from the $455M or $0.45 per share that was reported in the same quarter last year. In addition, the earnings beat the consensus estimate of earnings of $0.48 per share

The company reported revenue of $3.20B to mark an 8% increase from the same period last year and to beat the consensus estimate of $3.15B

Operating income increased by 16% and operating ratio improved 220 basis points

The company expects modest earnings growth for full-year 2014, with double-digit earnings growth and margin expansion expected in 2015

More Reasons to Stay Bullish on CSX

The major reason I am optimistic about CSX outlook going forward is the company’s strong cash position and the management’s firm believe in the future profitability of the company. You will remember that the transportation industry had a rocky start to the year as inclement weather disrupted schedules. However, the company has survived the worst and it has recovered nicely as the financials from the last two quarters show. The best part is that CSX successfully repelled a takeover bid from Canadian Pacific earlier this month.

How to Trade CSX Options

I am optimistic about the upside potential inherent in CSX Corporation as the stock heads to new highs. You can’t go wrong with buying the CSX Jan 2015 35.000 call (CSX150117C00035000) at an asking price of $1.54.

 

— Daily Option Alerts

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