Acfi 701 Kansas City Southern

Part3 : Recommendation

Kansas City Southern is one of the biggest railroad companies in the U.S. This company provides freight rail transportation services. According to Yahoo Finance, “The company operates north/south rail route between Kansas City, Missouri, and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas.” Strength of this company would be the pricing power than its primary competitor, the trucking sector. The railroad industry has only a few large companies that dominate the sector. By comparison, the commercial trucking sector is much more competitive. Therefore, railroads are not under as much pressure to lower their prices, and have much more chances to maintain their profits. The Weakness of the KSU is that when the economy is in recession, KSU will also face bearish market. In contrast, the opportunity of this stock is if you expect that the economy to perform strongly in the future, then the investment in this stock will make a significant amount of profits as this it is a growth stock. This stock also has some threats, of which is the fact that the stock has been bruised due to concerns about oil prices. When it comes to the sentiment indicators, KSU has 7.64% of short interest numbers, which isn’t high enough for investors to hope that shares will decline in value. Recently, insiders mostly try to sell their shares of the shock, but analysts are mostly holding or buy the stocks of KSU. Based on what I’ve researched, I would buy (long) stock. The 5-year chart of KSU tells us that the price of KSU will keep going up in general, and consensus and analysts also recommend that it’s better to buy the KSU stocks now, and sell it later for huge profit margins. But, I cannot be sure the opinion of the general public is always right, because P/E ratio and P/B ratio conversely show that KSU is not that promising.

My target is to buy the stock at $86 to gain profits, but the rationale target price is $ 87.98

Reference

Kansas City Southern. (KSU) (2016). Profile, business summary. Yahoo! Finance. Retrieved

         From https://finance.yahoo.com/q/pr?s=KSU+Profile

Part 2 : Estimates and Analysis [pic 1]

Part 1: Obtaining information

Kansan City Southern ( KSU)     CEO: David Starling    Next highest ranking officer: Michael Upchurch

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