CSX's train is headed north

Further, any above-consensus quarterly GDP increase for the U.S. economy will mean good things for CSX, a major transporter of basic materials for manufacturing, construction, and steel. Throw in (incredibly) yet another potential encounter with $100 oil prices -- which will increase the cost of transporting goods in the U.S. by truck - and one can see why Warren Buffett likes the rails. The First Call FY2009/FY2010 EPS estimates for CSX are $2.85 to $3.27. That $3.27 FY2010 EPS estimate may prove to be a tad low.

Technically, CSX Corp.'s stock chart is strong -- in an uptrend. CSX will encounter psychological resistance at $50, along with some year-end profit-taking from short-term IIs that boarded the train at around $25 earlier this year, but these will prove to be minor. CSX is headed north: a $70 stock price is likely within 12 months.

Finally, the Sell/Stop Loss has been raised to $31, or to just above cost, from $17. Hence, this is a zero-risk trade for your May-bought shares.

Stock Analysis: CSX Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in CSX now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your CSX position before December 2009. Revised Sell/Stop Loss if you bought shares in this company: $31.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.