Rectangle Pattern Suggests a Significant Move in Kansas City Southern (KSU) Soon

A rectangle pattern has formed in the chart of Kansas City Southern (KSU).  If the pattern is broken, a breakout or a breakdown could occur…

Kansas City Southern (KSU) is a transportation holding company. It focuses on the growing north or south freight corridor connecting key commercial and industrial markets in the central United States with major industrial cities in Mexico. 

The company is benefiting from increased efficiency and reduced costs due to its precision-scheduled railroading model. As economic activities increase, KSU is seeing a gradual recovery in volumes. Management expects 2021 revenues to double from 2020 levels.

While KSU has only $188 million in cash, its cost cutting actions have led to just $6 million in short-term debt and a current ratio of 1.3. The company is also quite profitable with a net margin of 23.4%.

Earnings are up 21.1% over the past year and are expected to rise 5.1% this quarter. The stock is trading at fair valuation with a forward P/E of 23.36. The stock has been consolidating in a trading range this year leading to a Momentum Grade of C in our POWR Ratings.

Take a look at the 1-year chart of KSU below with added notations…

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