We recently compiled a list of the 10 Best Industrial Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where CSX Corporation (NASDAQ:CSX) stands against the other industrial stocks.
Industrial stocks in the United States encompass a broad range of sectors including manufacturing, transportation, aerospace, defense, and construction. These sectors form the backbone of the American economy, driving innovation, employment, and growth. Companies within this category often engage in the production of machinery, equipment, and infrastructure essential for various industries. The performance of industrial stocks is closely tied to the overall health of the economy. Economic expansion typically boosts demand for industrial goods and services, while recessions can lead to contractions in this sector.
Recently, industrial stocks have shown resilience amid global supply chain disruptions and economic uncertainty, thanks in part to technological advancements and diversified service offerings. Advancements in automation, robotics, and artificial intelligence are transforming the industrial landscape. Companies are increasingly investing in smart manufacturing technologies to enhance productivity and reduce operational costs. Environmental concerns and regulatory pressures are pushing industrial firms toward sustainable practices. Companies are adopting greener technologies and renewable energy sources to meet regulatory standards and consumer expectations. Industrial stocks play a vital role in the US economy, offering a diverse range of investment opportunities. Understanding the dynamics of different sectors, keeping abreast of market trends, and evaluating economic indicators are crucial for making informed investment decisions in this space. With continued advancements in technology and a focus on sustainable practices, the industrial sector remains a critical and evolving component of the financial market landscape. Overall, industrial stocks returned close to 10% so far in 2024.
According to Federal Reserve Industrial Production and Capacity Utilization report, most major market groups saw gains in May. Consumer goods increased by 1.3 percent, driven by rises across all components except home electronics. Business equipment edged up by 0.2 percent despite a drop in transit, buoyed by gains in information processing and industrial sectors. Defense and space equipment rose by 1.0 percent, marking a nearly 10 percent increase from a year ago. The materials market group saw a 0.8 percent increase, with non-energy durables and non-energy nondurables each up by around 1 percent, and energy materials rising by 0.6 percent. In manufacturing, overall output rose by 0.9 percent in May, slightly above last year’s level. Durable manufacturing increased by 0.6 percent, nondurables by 1.1 percent, and other manufacturing (publishing and logging) by 0.2 percent. Within durable manufacturing, notable gains were seen in wood products (up 2.6 percent), machinery (up 2.3 percent), and computer/electronic products (up 0.8 percent). Furniture and related products saw the largest decline (down 2.6 percent). In nondurables, printing and support activities decreased by 1.5 percent, while other categories saw gains. Mining output rebounded with a 0.3 percent increase in May, following declines in the previous two months. Oil and gas extraction rose, offsetting decreases in other mining and support activities. Utilities output grew by 1.6 percent, surpassing last year’s level by 3.9 percent. Capacity utilization for manufacturing rose to 77.1 percent in May, slightly below its long-run average. Mining’s operating rate reached 92.7 percent, well above its average, while utilities remained notably below their typical operating levels despite a slight increase to 71.5 percent.
So, what are the best industrial stocks to buy in this current environment?
Our Methodology
We leveraged Insider Monkey’s comprehensive database of 920 prominent hedge funds to identify the top 10 industrial stocks with the highest level of hedge fund investment as of Q1 2024. These stocks are listed in order of increasing hedge fund ownership, providing insight into the most popular industrial stocks among elite investors.
A freight train moving through a rural landscape, its engine and numerous rail cars carrying the company’s cargo.
CSX Corporation (NASDAQ:CSX)
Number of Hedge Funds Holders: 70
CSX Corporation (NASDAQ:CSX) and its subsidiaries offer rail-based freight transportation services, including the transportation of intermodal containers and trailers. The company provides various other transportation solutions such as rail-to-truck transfers and bulk commodity operations. CSX Corporation (NASDAQ:CSX) also handles the transport of chemicals, agricultural and food products, minerals, automotive items, forest products, fertilizers, and metals and equipment. Additionally, it moves coal, coke, and iron ore to power plants, steel manufacturers, and industrial plants, and exports coal to deep-water port facilities.
On June 7, Wells Fargo began covering CSX Corporation (NASDAQ:CSX) with an Equal Weight rating and a $35.00 price target. The analyst highlighted CSX Corporation (NASDAQ:CSX) consistent performance and attractive lower multiple compared to peers, but noted its slower EPS growth. CSX Corporation (NASDAQ:CSX) is praised for its smooth operations and strong valuation alignment. UBS revised its price target to $44.00 with a Buy rating, while BMO Capital Markets maintained an Outperform rating and a $40.00 price target, citing strong operational execution. Recently, Anne Chow was elected to CSX Corporation (NASDAQ:CSX) board, enhancing its focus on growth and innovation. Chow brings with her a substantial background from her 32-year career at AT&T, with deep knowledge in technology and customer service. On April 17, CSX Corporation (NASDAQ:CSX) announced its latest quarterly earnings, reporting normalized earnings per share of $0.46, surpassing estimates by $0.01. The company also achieved revenue of $3.68 billion, exceeding expectations by $14.85 million. This strong financial performance highlights CSX Corporation (NASDAQ:CSX) effective operational strategies and solid market standing.
In the first quarter of 2024, the number of hedge funds with stakes in CSX Corporation (NASDAQ:CSX) increased to 70 from 61 in the previous quarter, according to Insider Monkey’s database. The combined value of these stakes is approximately $3.82 billion. Eric W. Mandelblatt’s Soroban Capital Partners emerged as the largest stakeholder among these hedge funds during this period.
Overall CSX ranks 7th on our list of the best industrial stocks stocks to buy. You can visit 10 Best Industrial Stocks to Buy According to Hedge Funds to see the other industrial stocks that are on hedge funds’ radar. While we acknowledge the potential of CSX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CSX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
