Why the Profit on Norfolk Southern Corp?
In a note on
U.S. railroad stocks, a UBS analyst downgraded shares of Norfolk Southern
Corp (NYSE: NSC) to Neutral from Buy.
UBS also cut
the price target of Norfolk Southern Corporation to $229 from $282 per share.
told investors in a note that with the macro backdrop deteriorating, consensus
2023 estimates appear too high for U.S. rails and they expect downward
revisions from industrial-related and intermodal volume assumptions in the near
a significant decline in freight demand would likely alleviate existing
capacity constraints and lead to the improved service levels needed for rails
to regain share from truck, we believe it will be difficult for the U.S.rails
to achieve 2.5% volume growth currently reflected in consensus," explained
the analyst. "We are cutting 2023E EPS by 10% for NSC."
Later in the
note, the analyst explained that they prefer Canadian rails over U.S. rails on
transportation companies are falling twice as fast as the hard-hit U.S. stock
market, reflecting investors’ expectations that a recession is likely ahead.
Jones Transportation Average, which tracks 20 large U.S. companies ranging from
airlines to railroads to truckers, has declined 12% this month. The S&P 500
and the Dow Jones Industrial Average are down about half that much.
declines in transportation stocks have indicated rough economic times ahead
amid lower demand for goods, materials and travel—which is widely expected as a
result of the Federal Reserve’s most aggressive tightening cycle in decades.
confirmation we’re headed for a recession,” Peter Cardillo, chief market
economist at Spartan Capital, said of the downturn in transport stocks. Mr.
Cardillo forecasts there will be a mild global recession at the end of this
year, lasting until the second quarter of 2023.
transport index is on pace for the largest monthly percentage decline since
March 2020, when pandemic-driven restrictions and lockdowns halted travel and
disrupted global supply chains. It is down 26% this year and trading at its
lowest level since late January 2021.
The Profits Explained.....
Obviously the results will vary from trader to trader
depending on entry cost and exit price that was undertaken. Some traders will
probably still be holding!
Entered the Norfolk Southern Corp put option on Wednesday, September 28, 2022 at 3:38pm for $3.6540.
Exited the trade on Friday, September 30, 2022 for $5.30, a
potential profit of 56%.
Important to Note: As this was a very quick trade many
members may not have been able to exit in time – but if the market continues
its downward spiral in the week ahead then further profits are expected.
Don’t miss out on further trades – become a member today!
About Norfolk Southern.....
Southern Corporation, together with its subsidiaries, engages in the rail
transportation of raw materials, intermediate products, and finished goods in
the United States.
transports agriculture, forest, and consumer products comprising soybeans,
wheat, corn, fertilizers, livestock and poultry feed, food products, food oils,
flour, sweeteners, ethanol, lumber and wood products, pulp board and paper
products, wood fibers, wood pulp, scrap paper, beverages, canned goods, and
consumer products; chemicals consist of sulfur and related chemicals, petroleum
products, chlorine and bleaching compounds, plastics, rubber, industrial
chemicals, chemical wastes, and sand; metals and construction materials, such as
steel, aluminum products, machinery, scrap metals, cement, aggregates,
minerals, clay, transportation equipment, and military-related products; and
automotive, including finished motor vehicles and automotive parts, as well as
transports overseas freight through various Atlantic and Gulf Coast ports; and
provides commuter rail passenger transportation services and operates an
December 31, 2021, the company operated approximately 19,300 route miles in 22
states and the District of Columbia. Norfolk Southern Corporation was
incorporated in 1980 and is based in Atlanta, Georgia.
More Reasons Why The Initial Weekly Options Put Trade
on NSC Stock.....
Wall Street has
slid deeper into a bear market, with the S&P 500 and Dow closing lower as
investors fretted that the Federal Reserve's aggressive campaign against
inflation could throw the U.S. economy into a sharp downturn.
weeks of mostly steady losses on the U.S. stock market, the Dow Jones
Industrial Average confirmed it has been in a bear market since early January.
The S&P 500 index confirmed in June it was in a bear market, and on Monday
it ended the session below its mid-June closing low, extending this year's
With the Fed
signaling last Wednesday that high interest rates could last through 2023, the
S&P 500 has relinquished the last of its gains made in a summer rally.
among stock traders was also shaken by dramatic moves in the global foreign
exchange market as sterling hit an all-time low on worries that the new British
government's fiscal plan released Friday threatened to stretch the country's
an extra layer of volatility to markets, where investors are worried about a
global recession amid decades-high inflation. The CBOE Volatility index,
hovered near three-month highs.
The Dow is
now down 20.5% from its record high close on Jan. 4. According to a widely used
definition, ending the session down 20% or more from its record high close
confirms the Dow has been in a bear market since hitting its January peak.
Carl Icahn's Thoughts.....
grisly 1H22 which represented the stock market’s worst performance since 1970,
the second half is shaping up to be a bit of a disappointment too. After
clawing back some of the losses, it’s been onto the slide again with the
S&P 500 almost back to the mid-June lows.
news, according to billionaire investor Carl Icahn, is that things could still
get worse from here.
“I think a
lot of things are cheap, and they’re going to get cheaper,” said Icahn,
pointing to the economic malaise, and laying the blame squarely at the Fed’s
feet, whose years-long fast and easy monetary policy Icahn see as the main
reason behind 2022’s rampant inflation.
printed up too much money, and just thought the party would never end," he
went on to say before announcing that the “party's over now.” For most, for sure,
but it looks like Icahn’s nous has kept him way ahead of the pack this year
too. Throughout the first six months of 2022, Icahn Enterprises’ net asset
value rose by 30%.
Britain’s currency is in trouble—and things could still get a lot worse
for sterling, experts warn.
The British pound crashed to an all-time low below $1.05 during early
trade on Monday, before recouping some of its losses to trade around $1.07.
Britain’s ailing currency, which had already fallen to a 37-year low
earlier this month, continued its downward slide on Friday after newly
appointed Finance Minister Kwasi Kwarteng unveiled the country’s biggest
package of tax cuts in half a century.
The planned overhaul includes cuts to the amount of income tax the
U.K.’s wealthiest pay, a cancellation of planned corporation tax rises and a
scaling back of stamp duty—a tax people in Britain pay when they buy a home.
The tax cuts are expected to cost around £45 billion ($48 billion) by
2026, adding to the estimated $60 billion the government is set to spend on a
national energy bills bailout over the winter.
The pound's plunge deepened further after Kwarteng doubled down on the
tax cuts, telling the BBC Sunday that there was “more to come”.
500 fell to its lowest level in almost two years on Tuesday on worries about
super aggressive Federal Reserve policy tightening, trading under its June
trough and leaving investors appraising how much further stocks would have to
fall before stabilizing.
been under pressure since late August after comments and aggressive actions by
the U.S. Federal Reserve signaled the central bank's top priority is to stamp
out high inflation even at the risk of putting the economy into a recession.
500 touched a session low of 3,623.29, its lowest point on an intraday basis
since Nov. 30, 2020. A late rally helped push the index off its worst level of
the day, but the index still closed lower for a sixth straight session as it
lost 7.75 points, or 0.21%, to 3,647.29 .
benchmark index fell more than 20% from its early January high to a low on June
16, which confirmed that the retreat was indeed a bear market, the S&P then
rallied into mid-August before running out of gas.
Investors would be wise to buckle up for more downside to an already
battered stock market, veteran CFRA Chief Investment Strategist Sam Stovall
"I think this will be a bear market with a recession," Stovall
said. "Bear markets with recessions have ended up being deeper and lasting
longer than those without a recession, with the average decline being 35%. So I
think we will probably end up seeing this bear market bottom around
Stovall's prediction would mark another 14% decline in the S&P 500
from current levels. And if hit, that would represent an approximate 33% drop
from the Jan. 3, 2022 record high — roughly in line with the long-term averages
seen during a recession called out by Stovall.
sure look ugly these days.
500 is down 23% year to date. For the tech-laden Nasdaq Composite, the loss in
2022 has widened to an even more painful 31%.
Dad Poor Dad" author Robert Kiyosaki, who previously sounded the alarm,
stresses just how badly this downturn could turn out to be.
going to be the biggest crash in world history, we’ve never had this much debt
pumped up,” he says in a Kitco News interview earlier this month.
Kiyosaki has previously tweeted that “Crashes are the best times to get rich,”
one might think it’s time to look for bargains in the beaten-down stock market.
not what Kiyosaki is doing right now.
Reserve will hike its key interest rate to a much higher peak than predicted
two weeks ago and the risks are skewed towards an even higher terminal rate,
according to economists polled by Reuters.
in expectations came after the Fed raised rates by 75 basis points last week
for the third straight meeting and foresaw going higher than it had previously
thought to tame inflation, which is running over four times above target.
already battered global stocks went much deeper into bear market territory - a
decline of 20% or more - on fears of recession and most currencies weakened
further against the multi-decade high dollar.
But that is
unlikely to push the Fed to switch its policy path anytime soon as Fed Chair
Jerome Powell and other policymakers have remained blunt about the
"pain" to come.
70% of economists, 59 of 83, predicted the central bank would hike its fed
funds rate by three-quarters of a percentage point for the fourth straight
meeting in November, a Reuters poll taken after the Fed meeting last week
predicted that would be followed by 50 basis points in December to end the year
that would be the highest rate since early 2008, before the worst of the global
financial crisis, and 75 basis points higher than 3.50%-3.75% predicted just
two weeks ago.
Director James A. Squires sold 105,420 shares of Norfolk Southern stock
in a transaction dated Tuesday, August 2nd. The shares were sold at an average
price of $248.81, for a total value of $26,229,550.20.
Corporate insiders own 0.31% of the company’s stock.
at the mutual fund giant Vanguard estimate the likelihood that the U.S. will
drop into a full-blown recession sometime during the next 12 months at 25%, and
sometime during the next 24 months at 65%.
Vanguard analysts aren’t alone.
SmartAsset survey of nearly 300 financial advisors taken in early August found
that 80% believe the U.S. either is already in a recession or will enter one
during the next 12 months. A rough rule of thumb to define an economy in
recession is when it records two straight quarters of declining economic
growth. For the second quarter of 2022, the country’s gross domestic product
(GDP) fell by 0.9% after a contraction of 1.6% for the first quarter.
to the issued ratings of 17 analysts in the last year, the consensus rating for
Norfolk Southern stock is Hold based on the current 2 sell ratings, 6 hold
ratings and 9 buy ratings for NSC. The average twelve-month price prediction
for Norfolk Southern is $283.10 with a high price target of $343.00 and a low
price target of $200.00.
So far this week, price action is following the frustrating pattern of
early gains, followed by late-day losses.
The faux rally was symptomatic of bear markets, when stocks often find
strength in the early hours but buyers disappear by the close.
NSC has a market cap of $51.12 billion, a PE ratio of 17.33, a
price-to-earnings-growth ratio of 1.75 and a beta of 1.32. The company has a
debt-to-equity ratio of 1.10, a quick ratio of 0.98 and a current ratio of 1.10.
Norfolk Southern Co. has a 12 month low of $216.03 and a 12 month high of
$299.20. The stock’s fifty day moving average price is $246.16 and its
two-hundred day moving average price is $248.03.
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