11 Blue Chip Stocks to Invest in at 52-Week Lows

5. CSX Corporation (NASDAQ:CSX)

Stock Price as of March 25: $29.53

52-week Low: $28.98

Number of Hedge Fund Holders: 63

CSX Corporation (NASDAQ:CSX) provides rail-based freight transportation services. The company’s extensive rail network, mainly in the eastern United States, offers a healthy foundation for future growth. Its reach enables the company to serve a diverse range of industries and markets, placing it well to capitalize on economic expansion and transitions in trade patterns. As industrial development continues, CSX Corporation (NASDAQ:CSX) possesses the opportunity to attract new customers and increase volumes throughout product categories. Its strong emphasis on service quality can act as a critical differentiator in getting new business and retaining existing customers.

Through the consistent delivery of reliable and efficient transportation solutions, CSX Corporation (NASDAQ:CSX) is expected to potentially convert more over-the-road shipments to rail, tapping an enormous market opportunity. This transition can be appealing to customers who look to reduce their carbon footprint. This is because rail transportation is generally more fuel-efficient as compared to trucking for long-haul freight. Also, CSX Corporation (NASDAQ:CSX)’s robust network and service quality can allow it to command premium pricing for the services, mainly in markets where the company possesses a competitive advantage.

Appalaches Capital, an investment management firm, released its Q3 2024 investor letter. Here is what the fund said:

“During the quarter, we established core positions in two railroads: Canadian National Railway Company (CNI) and CSX Corporation (NASDAQ:CSX). The investment thesis is simple. Domestic railroads have not seen volume growth over the last 20 years despite being the cheapest, cleanest, and safest form of freight transportation.4 The lack of volume growth and related share losses to trucking is due to the poor reliability of the networks. However, there is strong evidence to believe that this may not be the case going forward. It seems that investors are overweighting historical characteristics of the industry and not giving credit to recent and sustainable improvements in service metrics. If the rails are able to show any sign of sustained volume growth, our investment should perform very well.

The Canadian railroads have more or less operated at full capacity over the last two decades, while the U.S. networks have not. Why is that? There are a few reasons for the anemic volume growth domestically, but only one of which is not shared by the Canadian railroads: service. In 2017, had you shipped goods by rail in Canada, the odds that your shipment would arrive on time, or the “trip plan compliance” rate, was around 90% or higher. In the U.S., these levels were closer to 50%.5 Maybe you have a different opinion, but I am not particularly excited about using a shipping service that only has a coin flip’s chance of arriving on time, even if it may be more economical…” (Click here to read the full text)