NEW YORK ( TheStreet) -- Children of all ages love to watch railroad trains. There are societies and clubs that know more about locomotives, railroad cars and cabooses then most of us care to hear. It's a form of transportation that won't be going away.The point we investors need to remember is the economies of the world need rail-based transportation services to economically move all kinds of goods and supplies in a more environmentally-responsible way.
As mentioned earlier, CSX reports quarterly earnings today, and when it comes to earnings-per-share and revenue growth, let's hope it will be better than last quarter. With over $9 billion in total debt, CSX could stand some improvement with its balance sheet and cash flow statement. Total cash, operating cash flow and levered free cash flow will be line items worth focusing on. The competition for CSX in its operating regions is none other than Norfolk Southern (NSC), which, like CSX, gets a meaningful amount from transporting coal. That factor is one of the reasons NSC lowered its earnings guidance in September, triggering a sell-off of most of the railroad stocks. Tuesday's earnings report by CSX will indicate if the correction in the railroad stocks was overblown. NSC steps into the earning confessional one week later on Oct. 23. One positive area for potential growth for both CSX and NSC is the intermodal shipping segment. Suppliers, manufacturers and even retailers are finding that using intermodal containers and placing them aboard railroad flat cars can reduce shipping costs substantially. If the news Tuesday about the September industrial output is better than expected and the housing market numbers from the National Association of Home Builders show improvement, we might begin to see a rally in the transportation stocks like CSX and NSC. If CSX disappoints and lowers guidance don't be surprised if at first you see a decline that may test its 52-week low of $19.87. On the other hand if it beats expectations and gives any kind of bullish guidance, the shares of all the major railroad stocks may rally. "Can't you hear the whistle blowing? Rise up so early in the morning. Can't you hear the captain shouting, 'Dinah blow your horn'?" Can't you tell that I have railroad fever, and if the economy starts to percolate under the gushing forth of he Federal Reserve's quantitative easing, I expect shareholders might be blowing their horns in celebration! At the time of publication the author had no position in any of the stocks mentioned. This article was written by an independent contributor, separate from TheStreet's regular news coverage. Make smarter trading decisions and provide investment ideas that could help make you richer. Bryan Ashenberg does the dirty work so you don't have to!