Portfolio Update: New Addition (NSC; October 24, 2012)

As it so often seems, each time I post an update on my Watchlist, the market takes an unexpected twist, and I have to revise my gamplan. Since adding shares of Abbott Laboratories (ABT) and Air Products and Chemicals (APD), I’ve been honing in on: McDonald’s (MCD), IBM (IBM), Genuine Parts (GPC), Coca-Cola (KO), and considering adding more ABT and APD.

Although I still believe the companies mentioned above are starting to become attractively priced, I found an even better deal today. Norfolk Southern (NSC), saw its shares slashed by 7.45% today, after earnings were reported. NSC reported Q3 earnings of $1.24/share, which beat projections by 1 cent, but were 27% lower from Q3 last year. Total operating revenues were down 7% year over year.

One main concern for NSC was that coal shipments were down 16% and revenue from coal shipments were down 17%. This problem, however, is not isolated to just NSC, but also affects other railroad companies. Still, the market is very near-sighted, and once the bad news spreads, the analysts’ downgrade, and the market sells-off.

Here is A Forbe’s article, suggesting that NSC has now been oversold:

http://www.forbes.com/sites/dividendchannel/2012/10/24/top-10th-percentile-ranked-dividend-stock-nsc-becomes-oversold/

As a long term investor, I don’t panic over the short term news. In fact, in many ways, I welcome it. Missed earnings are usually some of the best times to add more shares of quality companies. Since I try to practice what I preach, I added 40 shares of Norfolk Southern (NSC) to my portfolio at $61.68/share.

I put in a limit order early in the morning, so missed scoring the shares at the bottom today. With the market, you never know. Sometimes it dips early morning and then recovers throughout the day. Other times, it just keeps plunging down further and further. Still, I got in at a much better deal than I did the last two times around (this is the third time I’ve purchased NSC in the last two months), so I’m not complaining. Long term, it shouldn’t matter anyway.

With the yearly bonus deposited into my brokerage account, I now have some more ammo to fire. Hopefully even better deals will emerge. As always, best of luck, and happy hunting! Things are getting interesting!

 

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Putting the Clamps on GreedFI FighterCompounding IncomeDividend MantraAll About Interest Recent comment authors
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The Stoic
Guest

I was on the buying side with you on this one. I’ve not had a chance to post about it, but I opened a position in NSC for 100 shares at 61.25. Like you I didn’t get it at its low for the day, but I think we both did well on the prices we paid.

Cheers

JC @ PassiveIncomePursuit
Guest

I was busy with work and driving much of the day but when I finally got a chance to check on the markets I saw the big drop for NSC. I almost picked up some more but I didn’t get a chance to check out the report so I didn’t buy in the blind. Sometimes doing nothing is the best option. If it remains deflated this morning then I might be picking some up to average down my position. Great buy though, I still like the railroad industry a lot.

Dividend Growth Machine
Guest

Nice purchase! If only I had the cash to do the same…

I will have some new capital in early November, but given that NSC is already a large position for me, I will probably invest in something else (at the moment, I don’t know which stock).

Average Dividend Yield
Guest

Nice buy. I’ve been looking at railroads for sometime now and noticed the drop in NSC. I haven’t pulled the trigger yet. In the past, procrastination has turned out to be my biggest enemy. I’m working on it. I started a new blog and would like to add you to my blogroll.

All About Interest
Guest

Great Buy! I had a trade on NSC yesterday that I just posted on my blog. I didn’t buy additional shares but I sold another Put option. To me it looks great here long-term and like you I believe that the coal weakness is a short-term problem. Good luck!

Dividend Mantra
Guest

FI Fighter,

Great move. I love averaging down on quality businesses I already own when the market gives me the opportunity to do so. I’m definitely interested in adding to NSC as well, but my capital is tied up right now as I search for economical transportation options due to the nagging issue with my bus being late in the morning.

Great, quality businesses selling for attractive prices is just simply one of the pure pleasures in life.

I think this one will serve us well in the long-term. Even with the reduction in coal shipments, NSC will pick it up in other areas. Railroads are just such a cost-effective way to transport goods.

Best wishes!

Compounding Income
Guest

Wow that’s a good buy. Looks like you got in before the ex date too! Phew you built up to 100 shares pretty darn quick.

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[…] Individual stocks will be entering “oversold” territory seemingly every week (I still recall this awesome opportunity to load up on Norfolk Southern (NSC)!!!). […]

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