Stockchase Opinions

Christine Poole Canadian National R.R. CNR-T BUY Feb 20, 2025

Long-term hold for teenager's TFSA?

Good idea. Together, CP and CNR have a duopoloy within Canada plus operations in the US. Rails have not performed that well this past year. Company guiding to high-single to double-digit topline growth. Tariffs won't impact directly, but risk is that economic slowdown would affect volumes. Trading ~18x forward PE, and wide discount to CP.

$146.880

Stock price when the opinion was issued

Transportation
It's the ideal tool to help you make quicker, more informed decisions for managing and tracking your investments.

You might be interested:

DON'T BUY
CNR vs. CP

Chart for CP looks better and fundamentals work. When those 2 factors go hand in hand, it's quite compelling. CP has outperformed CNR.

DON'T BUY

He holds CP, which has excellent management and the most unique footprint of any rail in NA. Tariff uncertainty impacts CP the most, but he decided to hold on and buy a bit more if it does get hit.

WATCH

Stock didn't perform the way he wanted it to, he sold. Fundamentals weren't going in the right direction. Warned on earnings many times. Bought back stock with debt. Cashflow not strong. Stock's fallen a lot, could be interesting to a new buyer, as he's bullish on the stock and on rails long term.

BUY
CNR vs CP

Owns both, core holdings. No one's building any more rails. Cheaper to ship commodities by rail than any other way. If an economic slowdown, traffic and volumes will slow down but it's still a pretty steady business. 

If the trade war goes on, everything gets more expensive and these two will be impacted negatively. But these events are always temporary. Trade wars are not good for inflation or the economy with US mid-term elections only 2 years away. He's trusting that rational minds will prevail.

WEAK BUY
Investor in 20s, for the long term.

As part of the CP/CNR oligopoly, it will always make money. Not even AI can make rails obsolete anytime soon. Very capital intensive -- operating costs, unionized workers, equipment. So FCF as percentage of revenue is not that amazing. Even with pullback today, still trades ~18-20x PE. Not overly expensive, but not cheap either.

Probably OK if you have a long-term view and want reasonable stability, grow as fast as the economy, get some efficiencies along the way, and collect the dividend. But it's not for him.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Oct 03/24, Down 8.9%)Stockchase Research Editor: Michael O’Reilly

Our PAST TOP PICK with CNR has triggered its stop at $141.  To remain disciplined, we recommend covering the position at this time.  

SELL

Small position. Not a great-looking chart. Thinking of selling. A potential candidate to raise cash in his portfolio.

HOLD

Critical piece of the supply chain. Still remains a dominant player in the vast network linking Canada and the US. Rough Q4 from labour strikes and extreme weather. Yield ~3.4%.

Stable, long-term asset, but facing margin headwinds from rising costs and lower productivity. Increased competition from CP-KSU merger.

WAIT
CP vs. CNR

CP has more catalysts from the Kansas City merger, and a better growth rate. Both are getting more attractive. If we get the all clear on the economy, both names will be decent entry points. Though optimistic, he's still a bit afraid, and wouldn't step in just yet.