Canadian National R.R. (CNR-T)

Commodity exports to the US are probably down. East-west rail merger in the States can take some traffic away from Canada. Glow in the rail stocks is coming off. Don't sell. Extremely well run. Will come back as the Canadian economy grows. 

Look at the numbers first, story second. Numbers explain why stock's down. Revenue growth over the last 4 quarters hasn't been inspirational; very little growth, averages out to about zero. Margins are OK, but ROC is slipping a bit. For the long term, buy it and forget it, you'll be fine. 

He wouldn't enter now. Wants to see the ROC move back up, which would need 5-8% revenue growth. He's had more success investing after results for the quarter are in; you might miss the first day where it gets a little pop, but the stock could also go down for the next 3 months.

Sold in September. We've been in a freight recession for 3 years, longest anyone can remember. Came out with a mixed quarter. 

Recent move down takes it to probably 17x forward PE, not bad. People are overly worried about economic risk. Will get east-west deliveries from the Jansen mine, plus increase in energy infrastructure. Sees more risk north-south. Not having owned it in a long time, he's started picking away at it.

He'd rather buy into weakness than chase things that have been running hard.

Old support from 2020-2021 is being tested, so far successfully. Suspects you'll see support coming in, and then may consolidate. Don't sell at this point, but don't load up on it either. Neutral on it.

Same comments as Cargojet: Chart shows a downtrend, being a laggard, but lately is starting to catch up. You can nibble at here. If we're starting a new economic cycle now, it will be positive for CJT and the economy. Expect weakness in a pullback coming. Play the long game and start adding to this now, but gradually.

Pricing power. Good track record on safety. Last year, economy was weaker, and this hit the rails. Labour disruptions. Volumes were affected. Affirmed guidance after Q1 reporting, expects 10-15% EPS growth (assuming there's still volume growth and no recession). Valuation is now at a very attractive multiple compared to historical levels and to the group. 

Went public in 1995, and has increased dividend every year since. Yield is 2.49%.

Sold this in favour of trucking, a more cyclical and higher-torque way to get exposure to recovery in manufacturing and merchandising. Covid explosion in purchasing made for difficult comparisons later, so trucking experienced a 3-year "freight recession".

Still, there's no good reason to abandon the rails. They give you a good franchise and "forever" earnings power. Sector is largely an oligopoly. Those trains should still be rolling 100 years from now. This name is a backbone of the Canadian economy. Tremendous compounder and TSX outperformer.

Canadian company. He's been 75% US, 25% Canada for a long time. He's now trying to reverse that and repatriate some of that US cash. The stock's been through a lot, dropping $40 in the last little bit. Spending lots of $$ to improve infrastructure, which will hopefully translate into some growth. Tariffs will resolve themselves shortly. Fairly good dividend of 2.53%.

Doesn't own yet, but plans to buy with proceeds from sale of US stocks. Sell if it drops below $130.

Both are really good, monopoly-type businesses. On timing, don't do either right now. Tariff inflation hasn't happened yet, but it will. As that causes economic problems, it will affect the economically sensitive names. The NA economy is vulnerable right now.

That said, his preference is definitely CP. Now that it includes Mexico, its footprint is so unique. Growth profile gives them more upside on earnings, which provides a buffer during economic weakness. Both trade at less than 20x PE, but CP is more compelling, along with its phenomenal management team. An OK buy here, but be prepared to buy more if it does get hit. Perhaps buy 1/2 a position now, and then the other half later whether it goes up or down.

She likes the rails but would like to see more consistency in the quarterly reports and more momentum. The dividend is 2 1/2% which is not great. There is upside in the fundamentals and it should turn around for the long term. It scores 6 out of 10 on the value scale.

Sold late last year, due to worries partly on tariffs and partly on management's ability to create value. Didn't like that it was buying back stock using debt, or yo-yo projections (up) versus guidance (down). Heavy capex business. Growth hasn't been there with pandemic, tariffs, inflation.

Probably some good value here. If you have a long-term investment horizon, not the worst idea to have a 1-2% position in the Canadian rails and just leave it alone. Doesn't have a strong conviction either way right now on CNR vs. CP.