Canadian Pacific Rail (CP.TO)

Canadian National (CNR-T) or Canadian Pacific (CP-T)? He thinks both of these look a little bit rich as compared to other transportation companies. If he was in the sector, it would be something like FedEx (FDX-N) or UPS (UPS-N). Hunter Harrison seems to have done a phenomenal job of turning this around and is saying there is still a lot of operating leverage to take place, so if you have to pick one, he would probably go with this one.

(Market Call Minute.) This is expensive now and he prefers CXS (CSX-N).

There is a slowly improving market environment in North America. This company moves a lot of stuff. Transports are hitting a new high, which tells you the market believes the economy is slowly getting better. They are a big beneficiary of the lower energy prices.

Bailed out of the railroad stocks quite a while ago. This has risen on the basis of coming out of an operating ratio in the 70s, and is now down to the mid-60s. Comparing it to the much larger and more established Canadian National (CNR-T), you are paying much higher multiples for one that is being fixed, rather than the one that has worked all along.

Rails are both holds here. Very stretched valuation. You are looking at valuations on rails across North America being very stretched. Don’t add to the position. CSX is more attractive.

Thinks the multiple is around 35X PE. Likes the rails, but this one is really riding on a wave of enthusiasm, relating to an improvement on its various ratios. Should it ever miss a step along the way, the stock will take a good 10%-15% hit. He has basically moved any money he had in this, over to Canadian National (CNR-T), which trades at about 18X and isn’t under quite the same spotlight to meet objectives. Both companies are in good growth areas and both are benefiting from the transportation of oil. They have more business than they can almost really handle at this time. A good place to be in this kind of a growth economy.

Well-run company and continues to do well. He prefers Canadian National (CNR-T), which trades at a much lower multiple. Was not operating very well, but is certainly doing so now and that is the benefit. Doesn’t pay a very strong yield. A highly valued stock. The rail industry is in incredibly good shape. He would prefer something a little cheaper Such As Canadian National (CNR-T) or CSX (CSX-N).

Owns CNR-T. Both rails are priced for perfection. Will enjoy further earnings growth as the economy continues to improve. He would not rush in right here.

Exceptionally strong in terms of its turnaround that, by and large, has already been orchestrated, and is reflected in the stock price. He is trimming his holdings because of the weighting in portfolios. Has one of the best growth rates, when you look at the “growing crude by rail” story, as well as the requirement to transport grain and intermodal.

Quite an expensive stock. Hunter Harris came in and improved operating efficiencies much better than he thought he would. Thinks the stock is priced without much room for error.

Likes the rails. They are a proxy on the overall economy. Energy output is up 500,000-1 million barrels a day over the last 5-7 years and has to be transported. Grain is backlogged because we can't move the stock quickly enough.

Canadian National (CNR-T) or Canadian Pacific (CP-T)? CEO has done a very good job, but not good enough to justify the stock price. Compared to any other railroad company in North America it is at least 50% more expensive.

Canadian National (CNR-T) versus Canadian Pacific (CP-T)? This ones multiple is a bit higher now, which hasn’t happened for a long time. On various metrics, Canadian National is the most efficient in North America, and probably on a global basis as well. Canadian National shows better metrics and is a little less expensive.

CP has far outperformed CNR in the last year to year and a half. An active investor took a position and made changes. There were operational improvements. A lot of that good news is built into the share price. Better to look at CNR where there is more opportunity.

(Market Call Minute.) Tremendous job was done by Hunter Harrison. Thinks they have plucked all the low hanging fruit and doesn’t see crude by rail growing by 3%. He would wait for a pullback.