This chart of NSC, above, gives us a number of things to work with. Sometimes the stocks that top out first are the ones that bottom first. NSC made a peak back in November 2014. It made a low in August and then two retests at the beginning and end of September. Prices have rallied back above the 50-day Simple Moving Average. While the On-Balance-Volume line hasn't started to move decisively higher, it isn't setting new lows. And the momentum study in the bottom panel has a small bullish divergence in August and September.
This chart of NSC, above, signals two more bullish clues. First, NSC is holding around the former resistance area from 2013. Former resistance areas on the way up can act as support areas on the way down.
At the bottom of the chart, we have a crossover for the Moving Average Convergence Divergence (MACD) oscillator. MACD crossovers below the zero line should be taken as a "cover shorts" signal. I prefer to wait for the MACD oscillator to cross the zero line before getting more bullish. If you are looking to hop aboard this train, I would try to buy a dip on NSC below $80, or a breakout above $84.
Separately, TheStreet Ratings team rates NORFOLK SOUTHERN CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate NORFOLK SOUTHERN CORP (NSC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $868.00 million or 2.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.81%.
- The debt-to-equity ratio is somewhat low, currently at 0.78, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
- 39.29% is the gross profit margin for NORFOLK SOUTHERN CORP which we consider to be strong. Regardless of NSC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.96% trails the industry average.
- NSC, with its decline in revenue, slightly underperformed the industry average of 8.3%. Since the same quarter one year prior, revenues fell by 10.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: NSC