Richard Anderson, a director at Norfolk Southern Corp (NSC), recently bought 2,000 shares. The buy increased his stake by 200%, and came to a total cost of $494,960.
Insiders were previously buyers in June, when a company director bought 2,000 shares for $438,500. And a cluster of company directors bought in May, with the largest buy coming to just under $1.25 million. Year-to-date, there have been only two insider sales, one of which occurred following the exercise of stock options.
Overall, Norfolk Southern insiders own less than 0.1% of shares.
The railroad network is up 9% over the past year, far lagging the returns of the overall stock market. Earnings soared 107% on better cost containment measures and slightly higher rail traffic, but overall revenues grew by a mere 2%.
Even with that lackluster performance, railroads are an oligopoly, and regionally tend to be a monopoly investment. Plus, the stock has started an uptrend since the end of June, and could be on track to retest its old 52-week highs by the end of summer.
Action to take: Shares are reasonably priced at 21 times forward earnings. NSC also pays a 2.2% dividend, slightly above its five year average yield just under 2%.
For traders, the uptrend could bode well for the September $260 calls. Last trading for about $3.40, the calls could see high double-digit returns on a continued rally higher over the summer.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.