Canadian National R.R. (CNR.TO)

Likes the rails. They are the beneficiaries of where we are in the cycle right now. You have to move more by rail. Most efficient operator in North America. Growth prospects are tied to where we are in the cycle and they are good. Oil by rail is big but we have had three derailments, however. Quality rail business. Prefers to US operators. There is a little room for expansion.

Closed at $58.83 and his model price is $70.71, a 20% upside. Like last August and September, the stock came back to a support level and before he would buy it, he would want that to happen again. If it came back to $52.92, a 40% upside, he would be a buyer. Best run rail in North America.

All rail stocks have done quite well. They are probably just growing into their earnings. Earnings will continue growing going forward because it is a softer play on the economy. They are doing crude now and also there is a very strong crop in Western Canada for wheat and grains. Would buy this on a general pullback.

4.5 times book value. Very, very expensive and extended. Not to say it will collapse, but there is risk in the rails to valuation. A beautifully run company. Exit at $48/$49 area.

Remains the best run and most efficient railway in North America. Are benefiting from an improving economy. Thinks there is further upside in the stock.

A great story and a great way to play the continuing growth in North America. It is fully priced. Would buy at $53-$55.

Railroads are a great business. All the investments that have been made were made many years ago and now they are just living off the profits. Lovely company that is generating massive free cash flow. A home run with their exposure to oil sands.

Just had a 2-for-1 split. 3^rd quarter had great numbers and the operating ratio is now down below 60%. Feels that rails are priced for perfection. If the whole market comes off with the taper, he would definitely be a buyer of this one. Try to get at $52-$53.

Has had a nice little pull back. He is a big believer that you want to own this one through thick and thin. A very important part of a core portfolio. A very well diversified company.

The problem from here is valuation on this and CP. US rails are cheaper and so he owns CSX at only 13 times earnings as opposed to almost 20. CSX is eastern US but trades with coal.

Sold his holdings a long time ago, but obviously too early. Feels the valuation at 19X earnings is too high, and if you own, he would consider selling.

Strong shareholder relations. Is one he likes and owns. Almost made it a Top Pick today. They have a lot of north-south exposure. Benefit from improvement in the auto sector. Earnings per share should accelerate over the next couple of years. A well run railway. Operating ratio could improve.

(His Top Pick on Sept 23/13.) Thinks this is going to have to rest awhile. Likes this on a long-term basis. If it runs a little, he might take some off the table. If it sold back down to $55, he would probably add to some of his accounts.

There is a chance for a dividend increase. Their dividend is fairly small relative to their cash flow. The problem he has with Canadian railroads is that they have done so well and so fast. Trading at 20X earnings which seems to be fairly aggressive in an industry that can grow a whole lot more than the GDP of the economy they sit in. Trading at more than 4X BV.

Continues to like this. Did a stock split, which is a good sign for companies. Really well managed company. Sees continued efficiencies but the macro picture, which is why she owns it, is very positive. You have not just economic activity increasing, but there are new uses for the rail lines, including the shipping of crude.