Canadian National R.R. (CNR.TO)

Canadian railroads have 15% compound returns going back 30 years. CP has done way better than CNR. Wishes he owned CP, and you probably should own both. Will see buybacks, dividend increases, growth at GDP+. Always cutting costs. Will see double-digit returns for a very long time. Nothing can displace railroads. Drones just can't move the heavy stuff.

Bullish because we'll see more onshoring. Hard to tell if we're going into recession or accelerating. Should see restocking of inventory. 

We like CNR, and the company operates in a duopoly market with CP. Although the rail industry may not grow too fast from here, the industry has tremendous staying power, and we expect CNR could continue to grow its dividends for decades.
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Canada is in a recession that impact the rails who move goods. Volumes are way down and so are revenues. Bulk commodities like grain are still doing well, and this remains a core holding of his. Industrials do suffer in a wider slowdown, but less so in Canada because we have fewer industrials than in the US. And rails are less cyclical. CN outperforms the TSX usually when markets are weak. They reiterate guidance, and he expects a dividend hike. Management is in good hands.

Effectively has a similar network to CP's, through strategic contracts with other rail lines. Dividend has grown more significantly than CP's. Prefers CNR because it owns prime real estate around the choke point, Chicago, allowing it to get across the city faster than anyone. 

A bellwether for the economy, so price has suffered, but this is an opportunity to buy.

Owns shares in company. Would recommend buying. Assets valuable since not building anymore. Strong pricing power. Free cash flow very strong. Excellent capital allocation with share buybacks. 

It's in the public interest to get this pipeline going, as it will be great for Canadian energy producers as a whole. Won't have a negative impact on the rails. Rail is not the most efficient for shipping oil, it's the overflow option. He's positive on CNR and CP, more so on CP.

Great acquisition of Kansas City by CP was a game changer. CNR is the gold standard in North America. US is not in a recession yet, but if it does happen, all the rails will get cheaper. Don't settle for just a 1% differential from the historical average, when you might be able to get it 20% cheaper.

He also owns CP. Some sensitivity to volumes in an economic downturn. Historically, has outperformed the TSX during downturns. Long and strong this name. Wouldn't shy away from adding here, despite economic clouds.

Assets valuable - not building any more railroads.
Prefers CP Rail.
Buy on weakness.
Good for long term investors if willing to hold for long period of time. 

He owns and prefers CP, due to its recent acquisition. CNR has fallen more than CP, and this could be due to cyclical shipping volumes and some perceived weakness in the economy. Strong company. Could add on a material pullback.

Arteries in the Canadian economy. Any economic softness would appear in the rails before other businesses. Efficient, environmentally friendly. Natural, durable economic moat. 19x earnings, but a quality compounder. 22% ROE. Yield is 2%.

PE ratios are too close to call. Yield on CNR is about 2%, versus 1% for CP. No one's going to buy it for income. Looking at the FMV, the stock prices are so close for each, you really can't judge. 

Big difference is the book value. CP looks so cheap on price to book because of accounting decisions on its Kansas City purchase. So he can't tell if that's real or not. When he looks at CNR's SVA chart, it has an easy downside in weak markets to about $116. That's not trivial. 

Dead heat on a merry-go-round. Neither is reasonably attractive right now.

Would buy neither. We're heading into a recession or slowdown later this or next year. Neither stock will do if this happens. But if you're bullish about the economy, the rails will do well and CP will do better because of the Kansas expansion.

CP has been getting all the attention because it merged with Kansas City Southern, but CN trades at the better PE of 20.28x compared to its rival of 27.96x. No question that CP is a powerhouse, but it will take time to absorb KC into its operations and pay for it. Both companies enjoy a duopoly in Canada, so the moat is high. Read 3 All Canadian for our full analysis.

Defensive industrial. Despite Canada perhaps already being in a recession, can still grow EPS. Company anticipates 10-15% earnings growth 2024-2026. Increased productivity of network. Continued dividend increases. Yield is 1.96%.