Canadian National R.R. (CNR.TO)

He likes the railways. This is the one he owns. It is a direct play on the economy.

Because he doesn't own resources, but wants to participate if there is a rally in the next year or 2, he would rather be the shipper of resources. This company pretty much dominates Canada, being East/West and North/South. It also has an ownership in a container port in Prince Rupert BC. The deal they did with BC Rail back in early 2000 gives them a straight pass from Fort Murray to Prince Rupert. They are cost-effective and are using money to buy locomotives now, because of the bumper harvest in wheat. They’ve been growing the dividend every year by about 10%-20%. Dividend yield of 1.6%. (Analysts' price target is $110.)

Has been a great performer for many years. They have one of the best networks in North America. They benefited from having the best operations in North America. Has been a great compound of value in the long term. Owns Canadian Pacific (CP-T) instead. They both offer similar exposure. Good stock to own for the long term, but probably not the best opportunity to buy at this point given the rebound in economic growth and rail volumes.

A national champion and a serial dividend increaser. Buys back stock. Sells off real estate every now and again. It is a premier by the fact that the tracks are in places which cannot be duplicated, and it's a monopoly in those areas. Dividend yield of 1.6%. (Analysts' price target is $110.)

This probably has a better case for growth than Canadian Pacific (CP-T). Their 10% growth rate is pretty well in the bag with market share gain. They have slightly higher ORs than what the market expects, but that is probably in the stock. He likes this and it will probably go higher.

For long term? The rails are great stocks, they go through some difficult periods. It moved up in the later part of 2016 and 2017 and now it's consolidating again. You have to be patient. In the long term, it may possibly be moving back to its long term trend line. You may see that the rails move sideways for a little while. It’s a fine looking chart if you are in for the long term.

(A Past Top Pick Oct 28/16, Up 23%) It is a nice, easy way to get exposure to the North American economy. He prefers this to CP-T.

Bought this in 1997 because it was the lowest cost operator, it is both east-west and north south, and has ownership of rails in the Chicago area. Doesn't know how NAFTA renegotiations will affect things. However, they should do better than other rails because they have alternatives. If it got a little cheaper, he would be more interested. Dividend growth has been roughly 20% over that time frame.

Transports are good to go over most of the winter. This had a bit of consolidation in 2015-2016, and then broke out. The chart looks like it is consolidating. The bigger picture is pretty bullish. If you are a long-term buyer, you shouldn't worry about the consolidations. We are in one of those sideways patterns, but it may take a while. Personally, he would buy near the bottom of the trading range and wait it out. However, if you are long-term, you could probably own it and it would probably do fine over the next 10 years.

There was disappointment with their recent earnings and it has been sort of going sideways. He would give it a little time. Their recent earnings report wasn’t that super.

It is a very well run company and rails are a good proxy for the North American economy. It is a good way to participate. He is cautious on the Canadian economy, however, but the rails had good runs over the last few years. He does not hold it right now. It is a good one to hold and to participate in.

(A Top Pick Oct 28/16. Up 25%.) Doesn’t think the 25% will get repeated. Well-managed and a good way to get industrial and general economic exposure. Also, if you own pipelines, rails are a good hedge.

You may get a little pop in this, but the problem is that it has reached a little beyond its intrinsic value. It is having a very hard time going anywhere at this juncture. He would be more on the side of trading out, looking for a bottom of around $75, rather than owning it.

This is really predicated on economic growth. There are 2 facets to their model. One is price increases and the other is volume increases. They have been able to pass on price increases fairly consistently. On the volume side, it is economic growth. A very well-run rail with a low operating ratio.

His preferred choice in rails, and his biggest investment in that sector. They have a tendency to outperform their guidance, and thinks they will do it again this year. Very strong cash flow growth. Good operating ratio performance. Because of the free cash flow growth, the dividend keeps constantly being increased.