Canadian National R.R. (CNR.TO)

(A Top Pick July 19/13. Up 34.96%.) Still likes this. The stock is acting well. Moving lots of fracing sand.

Expect this will do pretty well. All the rails have done very well. The drawback to rails is that they have all had very, very big moves. A lower PE way of playing this is through Element Financial (EFN-T), which is involved in building new railcars.

As long as economy continues to more forward it will do well. CP-T is a little cheaper however and if he was going to own one he would buy CP-T. Wait for a pullback before buying either one.

(Top Pick Jun 18/13, Up 35.82%) Railways are good proxies for economic growth. Even CP has come a long way; this is still the most efficient and best run railway in North America.

Thinks this is overvalued, but that Canadian Pacific (CP-T) is even more overvalued. US investors have come into CP on the Hunter Harrison impact whereas Canadian investors in CNR have pulled back.

This still looks OK. It has a beautiful chart. The economy is still going forward, and this is a stock that really gives you a window on the economy.

Trading pretty close to 5X BV, and the stock has never been here before. Not necessarily bad as the whole Dow Jones Transportation Index is trading up in the same place. This is starting to get pretty expensive. $77 would be the maximum he could see, and then it would be out of gas entirely. Currently it is fairly valued, but for a long-term holding, this is not a good place to be.

Best and most efficient railroad in Canada. Also, likes that it goes both north-south and east-west. This is a big advantage in shipping all kinds of goods, especially potentially heavy crude.

Canadian National (CNR-T) or Canadian Pacific (CP-T)? Feels this one presents some value.

A little mystified by valuations on the railroads these days when he sees them trading at 20X earnings and significant multiples of cash flow. If he were buying a railroad today, this would be the one he would buy. In the long run, railroads can’t really grow any more than the economies in which they participate. Occasionally you get a bump from a commodity like oil, but he thinks regulators are going to step in and that will slow down.

Would wait for a bit more of a pullback to $60-$61 before buying. Her last purchase was when it pulled back to around $60. She would like to see at least a 10% return over one year from her target price. A dividend of about 1.5%-2%. They tend to increase their dividend every year.

(Market Call Minute.) On dips, this can be a Buy. Not cheap anymore.

New clients go into it. Oil is a growth area for rail until new pipelines get built, which take a long time.

Canadian National (CNR-T) versus Canadian Pacific (CP-T)? CP’s multiple is a bit higher now, which hasn’t happened for a long time. On various metrics, this company is the most efficient in North America, and probably on a global basis as well. Very well run railroad. PE multiple is around 17 or 18 times, which could be regarded is expensive, but the whole industry got pricing power 6-7 years ago. PE multiples moved up to the 14.5-15 area, and more recently, have moved up again which he feels is justifiable. Seems expensive, but if they are going to grow their earnings and dividends you’ll get double-digit growth in both. On most categories, this shows better metrics than Canadian Pacific and is a little less expensive.

Wait for it to go below $50.