Friday, September 21, 2012
New Purchase - NSC
I bought 19 shares of Norfolk Southern at $65.71 which amounts to a 3.02% yield factoring in commissions. This purchase was completely unplanned, I honestly didn't think I'd buy anything else this month. NSC lowered its guidance citing weak coal shipments and fuel surcharges which sent the stock price in a downward spiral the past couple days. NSC was trading in the mid 70's at the beginning of the week and is now over 12% lower. Situations like this is why I like to keep some dry powder available. Even though the market as a whole is pricey it is still possible to find stocks trading at attractive valuations. Short term this purchase might appear suspect due to the lowered guidance and general concerns over coal consumption. I'm approaching this from the long term view that railroad companies with continue to be profitable especially if gasoline and fuel prices rise over time. I believe it will. If you think gas is expensive in the U.S. you better think twice. It's roughly $6/gallon in South Korea...
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You are the third or fourth blogger I've read who purchased NSC on the recent weakness. I've had my eye on it too. Have to say it looks very tempting at these levels. Hope it works out for you.
ReplyDeleteYeah I've noticed a lot of dividend growth bloggers bought a slice the past few days. The current menu of stock prices is not that exciting so seeing a quality company go on sale stirred up interest. If you stay tuned you might find an even better price than we paid, nobody really knows where it will bottom out. If it declines from here I'd have no problem increasing my stake, we'll have to wait and see. I like to average down.
DeleteNice purchase -- plenty of us hopped aboard the NSC train this past week!
ReplyDeletehaha yeah most of the bloggers I follow got in on this one. I've seen this a few times in the past.
DeleteChoo choo - all aboard! We're in great company.
ReplyDeleteI agree with you on the perspective needed here. Short-term NSC may have some troubles, and the lowered guidance has already told us that. Long-term, as you pointed out, railroads aren't going anywhere. NSC is particularly well-run, and they won't be the only railroad to see some pain over coal issues.
Best wishes!
The good part is that short term troubles have already been factored into the price.
DeleteNSC raised its dividend last month. If management and the board is confident enough to for a dividend increase, actually 2 this year, it leads me to believe things will be okay. The dividend looks very sustainable.
haha, looks like NSC was the consensus "pick of the week" stock this week. Kind of how INTC was a few weeks back. I'm all aboard and very pleased to get in near the 3.0% yield point!
ReplyDeleteYikes, $6/gallon for gas? I'll think twice before complaining when I see $4.30. Still, at this rate, I'm gonna need to make the prudent early retirement move and start biking to work.
Cheers!
Wish I would have waited on INTC. I still think my entry price was solid in the longrun. All the stock valuation calculators show it's worth more, but I guess those are just number crunchers.
DeleteI'm going to make the prudent move of dumping my SUV and getting a fuel efficient car once I get back. Man I will miss my wheels, but autos are huge obstacle holding me back from achieving my goals.
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