Stephen Takacsy, B. Eng, MBA Canadian Pacific Rail CP-T BUY Apr 29, 2025

Its main business is a great one and they have sold off their non-core assets. At 23X earnings it trades at a premium to the sector. The buying of the Kansas City line gives them a franchise from Canada to Mexico. It is good to buy for the long term as well as CN Rail.

Owned this years ago and should have hung on. Looking to get back into rails (possibly this name), hoping for a correction because of tariffs, but the market's too smart.

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.

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.

Negatively impacted by trade. Economically sensitive. Likes the business. With its broad North American footprint, likes it better than CNR. More earnings upside from cost-cutting from KSU acquisition. Margins and cashflow are great for the rails. Constructive longer term, once tariff issues get sorted. Wait for more weakness.

Very narrow trading range over last 5 years. Bought KSU 2-3 years ago, yet still in the trading range. Headwind from trade issues. Its network should be fantastic once the trade deals are settled. Pulled back guidance for the year to low double-digit EPS growth. Longer term, should see high single-digit revenue growth.

The trade deals will get done. Goods still need to be shipped. He's positive on it.

Prefers CNR on valuation. Lots of embedded synergies after the KSU acquisition, and if they don't meet targets the high valuation makes it vulnerable (especially in this market).

Tariffs were an opportunity to buy at a discount. No alternative for Canadian commodities to get to the US. Next US House elections are in 18 months; if we start to see significant US pain from tariffs, they'll hit pause. Longer term, having a network to serve Canada/US/Mexico makes a ton of sense. Share buybacks and dividend increases. Buy and hold for a long time. Yield is 0.80%.

Things seem to be going well. The rails are such a bellwether on goods, manufacturing, and broader economy. Volume growth in mid-single digits in Q1, company says those volumes have accelerated in April and May. Noted strength in bulks (such as Canadian grain and fertilizer). Autos were steady, which is comforting. Cost and revenue synergies from the KSU integration. 

Company hope that JV with shipping companies will drive more volume growth. His firm thinks there's more rerating potential in trucking, but this name is an outperformer through the cycles. 10-year total compound shareholder return of 11%, versus 9% for the TSX. High single-digit growth rate. Yield is ~2%.