What CSX Corp. Can Tell Us About Economic Improvement

Source: Thinkstock

CSX Corp. (NYSE:CSX) is one of the companies I look to in order to get a feel for how the economy is really operating. Sorry, government reports, you are not always to be trusted. The reason is because CSX is close to industry and business, as it provides rail-based transportation services in North America.

It has a business model that allows investors to better understand what is happening in the overall market. Sure, we can look to the performance of the SPDR S&P 500 ETF (NYSEArca:SPY) to get a feel for how companies are doing, but this just tracks the stock. A company like CSX is in the thick of things, and its performance can give an indication of the health of the economy.

The company offers traditional rail services and transports intermodal containers and trailers. The company transports crushed stone, sand and gravel, metal, phosphate, fertilizer, food, consumer, agricultural, automotive, paper, and chemical products; and coal, coke, and iron ore to electricity-generating power plants, steel manufacturers, industrial plants, and deep-water port facilities.

As you can see, this crosses many sectors. It also provides intermodal transportation services through a network of approximately 50 terminals transporting manufactured consumer goods in containers in the eastern United States, as well as performs drayage services, including pickup and delivery of intermodal shipments and trucking dispatch services. In addition, the company operates various distribution centers and storage locations. It also connects non-rail-served customers through transferring products from rail to trucks, such as ethanol and minerals.