Canadian Pacific Rail (CP.TO) Buy, Sell or Hold

Canadian Pacific Rail (CP.TO)

121.20

-1.48 (1.21%)

as of Sep 30, 2026, 8:00:00 pm Market Open.

643 watching

BUY

Acquisition of KSU affect dividend? Dividend payout is low. Dividend has grown 17% a year for 5 years. Earnings will grow close to 20% in 2023. Likes rails and transports. He'd be a buyer.

COMMENT

The question was on railroads. Likes Canadian railroads. Operating costs are down now. He prefers CP since it did a great job of acquiring and running Kansas City Southern. This gives them a great network of north/south as well as East/West corridors.

DON'T BUY

See also his CNR comments. He prefers CN based on PE. CP pays a better dividend though, but CP will integrate with KSU and any integration carries risks. Expect margin pressure in the first half of 2022 during inflation as costs rise.

WAIT

Trades these names. Long in the names since the sell-off in summer. Now has trimmed. No direct exposure. Looking to buy back into the lower end of the range. Call it neutral. Would buy it at 4-7% down. Be patient, and wait for better valuation.

BUY

Really likes it. Also owns CNR. Industrial exposure, but not labour intensive. Great business. CNR is under pressure to improve operational metrics. A bit pricey. For CP, lots of synergies with the KSU acquisition. Perhaps a bit more upside with CP over the next 12 months.

COMMENT

If economy recovers, will see increase in railroad stocks. Stock price will go sideways until Kansas City acquisition and board troubles resolved.

COMMENT

CN Rail vs. CP Rail Asked to choose between these two. It's a close call. The railway business has been very resilient over many years. CP is much more exposed to grain which had a bad year. They also made a huge acquisition of Kansas City S which is dilutive in the short term but accretive over time. CN does not have this kind of uncertainty and not as much grain exposure so he would side with CN

BUY ON WEAKNESS

Great businesses however, thinks that railroad stocks (CP & CN) are overvalued. Growth outlooks don't justify valuations. Wait to buy on a pullback. Free cash flow yields are too low low (~3.5%) 20x earnings an attractive point of entry.

BUY

Railroad business is a great business. Only a few players in the industry so easy to raise prices. Better prices = better margins. Owns CN Rail, but not CP Rail. Good stock to own over the long term.

BUY ON WEAKNESS

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Current KSU holders will be getting CP stock and some may decide to exit. The deal has been in the news and this is probably priced in. A drop would not change any of the fundamentals of the company so you could use it to buy in. The benefits from the merger will take some time, but it is an investment and not a trade. Unlock Premium - Try 5i Free

DON'T BUY

Under pressure right now. Trades at 19x earnings. Hard to squeeze as many synergies out of the acquisition as it thought. Not convinced it will be a great play. You might get a return of 5-10% over the next 2-3 years, not great growth. Restructuring costs.

WEAK BUY

CP vs. CNR You can probably buy it here, hold it for the long term, make pretty good money, and outperform the TSX. He aims to buy the best opportunity in each sector, so he owns CNR. BC flooding will impact earnings of both, but not a long-term issue. KSU merger is this week, likely to be approved. Challenge integrating this sizeable acquisition. Opportunity is better in CNR.

BUY

A good company, but shares have come down so far that you must buy. Will do well when the economy rebounds.

HOLD

Big acquisition will cost money, but will be great for them over the next 10 years. Short-term issues in BC. All this is already priced into the stock. Fine to hold.

BUY

CP vs. PPL CP from a growth perspective. The KSU acquisition will be fantastic. Next couple of quarters might be difficult, but the acquisition will be accretive. But hang on to PPL for decent valuation, some growth, great yield.

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Canadian Pacific Rail (CP.TO)