(The following appeared at CNN.com on April 10.)
Railroad operator Kansas City Southern (KSU) cleared a 10-month base in huge volume on March 25.
Since then, it has eased just below its 39.82 buy point 14 below-average weekly trade.
Its Transportation-Rail industry group is among the top performers year to date.
Analysts expect Kansas City Southern’s earnings to grow 22% this year and 28% in ’09. While that’s down from the three-year growth rate of 142%, the 1,000% earnings turnaround in 2006 inflated that figure.
The company’s rails serve the central U.S., Mexico and Panama.
New growth is expected from three new auto plants under construction in Mexico. Kansas City Southern will ship those vehicles.
While fuel prices are up, new locomotives are improving fuel efficiency, cutting maintenance costs and reducing service tie-ups. In recent years, more than 220 old locomotives have been retired.
The company expects to have one of the youngest fleets around when the full replacement program is completed over the next year or so.
Pretax margin is 13%, the highest in at least nine years.