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Author: ferjen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8722  
Subject: Norfolk Southern (NSC) Date: 11/25/2012 8:24 PM
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I stumbled onto this one in CAPS. The yield looks good and it's recent drop is based on loss of coal revenue. The consensus in my reading so far is the coal loss is overblown. Here is one person on Seeking Alpha who disagrees,

http://seekingalpha.com/article/1024091-norfolk-southern-not...

but does admit the stock is now slightly undervalued. What's nice is this one could add dividend flows from the transportation industry with a somewhat attractive entry point in a business that has a nice moat (it's hard to build your own railroad nowadays).

Here is some dividend history:

http://www.nscorp.com/nscportal/nscorp/Investors/Stock_Infor...

They've had some cuts in the past, but nothing since 2000...

Here is the 16-year BMW Chart showing a CAGR of 10%:

http://invest.kleinnet.com/bmw1/stats16/NSC.html

The 30 year chart shows a better CAGR, suggesting the CAGR is slowing, but the 16 year is actually slightly better than the 10 YR, and it will be higher still with an attractive entry point.

I'm toying with opening a starter position around $57 with a more substantial stake around $50 to $52 where $50 delivers a 4% yield...
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7681 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 11/25/2012 10:34 PM
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The main factors in the decline in coal demand in the US are thought to be 1) low natural gas prices causing those who can to switch, and 2) increasingly stringent regulations causing older coal fired boilers to shut down.

There are also international components due to slowing economic activity and general concerns about carbon dioxide generation and global warming.

Coal interests continue to believe coal is an inexpensive fuel that will continue to find markets at least in the export market.

Of course NSC services the Eastern coal fields and ports where coal tends to be high in sulfur. Low sulfur western coal can be hauled by Norfolk Southern when it is shipped east of the Mississippi River, but Union Pacific and BNSF get most of that tonnage.

Until some of the uncertainties are resolved, it could be dicey times for coal investors.

NSC and CSX continue to have the problem of low clearance bridges and tunnels that prevent shipment of double stacked containers except on certain routes. They are investing to correct this problem. There is also the problem of massive rail congestion in the Chicago area.

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Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7683 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 11/26/2012 11:58 AM
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The main factors in the decline in coal demand in the US are thought to be 1) low natural gas prices causing those who can to switch, and 2) increasingly stringent regulations causing older coal fired boilers to shut down.

There are also international components due to slowing economic activity and general concerns about carbon dioxide generation and global warming.

Coal interests continue to believe coal is an inexpensive fuel that will continue to find markets at least in the export market.

Of course NSC services the Eastern coal fields and ports where coal tends to be high in sulfur. Low sulfur western coal can be hauled by Norfolk Southern when it is shipped east of the Mississippi River, but Union Pacific and BNSF get most of that tonnage.

Until some of the uncertainties are resolved, it could be dicey times for coal investors.

NSC and CSX continue to have the problem of low clearance bridges and tunnels that prevent shipment of double stacked containers except on certain routes. They are investing to correct this problem. There is also the problem of massive rail congestion in the Chicago area.

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All valid points.

On the up side is that rail is still more fuel efficient & thus cheaper vs truck shipment. Though I expect shipment by truck is faster.

As gasoline price continue to raise rail becomes even more attractive.

I own NSC & will prolly purchase more though I'm sitting on the sidelines now as I expect fiscal cliff & bad news from the EU will will drive the the market down further.

There are prolly better purchases out there [MCD, COP, AFL, XOM] IMHO. Depends whether you already own them or not. But methinks NSC CSX are decent choices for yield & diversification. And as I said before-- waiting fer further decline in the market.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7684 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 11/26/2012 1:13 PM
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And by the way, we have a reasonably active Railroads discussion board in Fooldom where we try to keep up with developments.

http://boards.fool.com/kearny-substation-damage-limits-capac...

Additional participants are welcome.

There are also discussion boards for each of the major US railroads.

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7685 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 11/27/2012 1:03 AM
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This, I think, is a tough one. Not in the sense that railroads that move freight are going away anytime during my lifetime, or that they're about to stop making money, but for two shorter term reasons:

This business about coal and cheap natural gas. How, or when, it will eventually play out is anybody's guess. Those who think they know for sure probably don't. Even a stopped clock is right every twelve hours.

It is pertinent that Norfolk Southern ships an awful lot of coal and if less is shipped that shortfall isn't going to be magically, and quickly, made up elsewhere. An improving economy will surely help, but its not a magic bullet.

Secondly, with the so-called fiscal cliff looming, this stock, and most others, will likely go down if there isn't a workable deal on the table by the end of the year.

With consideration, although I've been monitoring this stock too, I'm inclined to sit on my hands and see what the next few months bring price-wise. If it goes up from here and there's no more contractions to the downside, there's plenty more fish in the sea.

kelbon

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7704 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 12/1/2012 3:50 PM
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http://www.progressiverailroading.com/prdailynews/news.asp?i...

Norfolk Southern's pier 6 in Norfolk, recently updated, is the largest coal exporting facility in the northern hemisphere.

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7714 of 8722
Subject: Re: Norfolk Southern (NSC) Date: 12/5/2012 8:58 PM
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Most electric utilities that can switch their boiler fuel from coal to Natural gas have already made the switch to gas. Those that can not use natural gar rather than coal are retro-fitting their generating capacity. In the United States, there is an over-abundance of cheap natural gas. This situation is likely to last for the next five to ten years or even more.

Kahuna, CFA

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