Claude Mongeau, a director at Norfolk Southern (NSC), recently bought 5,650 shares. The buy increased his stake by nearly 40%, and came to a cost just under $1.25 million.
He is one of four directors who picked up shares last week. The smallest buy was for $150,000 shares. A third director saw their position grow by over 1,000%, and the last director to buy was building an initial stake. These mark the first insider buys over the past two years.
Overall, Norfolk Southern insiders own 0.1% of shares.
The railroad is up 5% over the past year, far lagging the overall stock market. Revenues are down by 4%, and earnings are off by 88%. Consumers have been spending less on physical goods, which has reduced rail volume.
However, the railroad remains profitable, and shares trade at 18 times forward earnings. Railroads operate as a regional transportation and logistics monopoly, which should allow them to fare better over time.
Action to take: Investors may like shares here. After sliding over the past few months, NSC shares appear to be starting a new uptrend. At current prices, buyers can also get a 2.4% dividend.
For traders, the September $250 calls, last trading or about $3.35, could see mid-to-high double-digit returns in the coming weeks following further upside for shares.
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.