Industrial Power: Watch CSX, MMM, and Cintas

Stock in 3M, which reported its earnings on Friday morning, has doubled from lows reached in March 2024. (Gabby Jones/Bloomberg)

Norfolk Southern has grabbed headlines this week, with Union Pacific reportedly exploring a takeover. But CSX deserves a closer look too.

Where there is smoke, there is often fire, and further consolidation talk in the rail space could lift the entire group. CSX is also well positioned in terms of its technical setup.

The stock is currently trading just 7% below its 52-week high, outperforming Union Pacific, which sits 12% off its peak, though still trailing NSC, now just 3% from its annual peak.

CSX is trading just above its double bottom breakout at $33.84, having cleared its February highs to complete the move. From here, it looks poised to chug higher, pun intended.

Two other industrial stocks, 3M and Cintas , are also in position for gains.

Technicians often say that the best breakouts tend to work right away. 3M is under pressure in a post-earnings move on Friday, but the long-term story remains intact. The stock is trying to distance itself from its cup base pivot at $156.45, a pattern that had been forming over the past five months.

The stock has now doubled off its March 2024 lows. The tight, gradual price action along the way is notable, indicating more gains could follow. Additionally, it has managed to avoid any meaningful declines during the run.

If momentum holds, 3M appears well positioned to reach the $185 level by the end of 2025.

Cintas isn’t just another industrial company. It offers a reliable reading of Main Street activity, arguably the heartbeat of the U.S. economy, with exposure to a broad base of small and midsize businesses. Primarily a rental and services play in the uniform industry, it is highly valued, along with other business-services companies.

On Thursday, Cintas stock jumped nearly 4% after the company reported earnings. That move wasn’t a surprise, considering it has gained ground in 10 of the past 12 post-earnings trading sessions.

From a technical standpoint, the setup looks strong. Shares are zeroing in on a cup-with-handle breakout at $229.34, a pattern that has been forming since November. A breakout above that level would negate any concerns of a double top and could open the door to further upside.

Write to Doug Busch at douglas.busch@barrons.com