Canadian Pacific Rail (CP.TO)

Car loads were up 2% in Q2 YOY. He owns neither Canadian rail. Perhaps there are more goods being moved to anticipate Trump imposing tariffs if he wins. The rails will be stagnant for a while.

TFII is up 17% YTD, so not much of a pullback. On a YTD basis, outperforming the railroads. He likes both those businesses. Canada has good geography for trucking and infrastructure. 

CNR is the laggard. CP is doing nicely. He still regrets not switching from CNR to CP. 

Growth significantly driven by increased industrial activity, near-shoring is increasing demand. Benefited from higher US shipments, offsetting lower Canadian grain and coal volumes. This just reflects the stronger US economy. Strong growth in coming years. 27x is a bit expensive, but growth is higher too. Potential 11% upside from here.

He sold. Likes it long term, technical trends are still there. However, missed Q1 in April. Half of revenues come from Canada, and he sees a sluggish Canadian economy going forward. 

Pace of lows has slowed a bit, narrowing to what's called a "falling wedge". It it can break out to the upside, that would be really bullish, say a close above $80. If it continues to carry downwards, the $75 round number is coming up, looks like a bit of support around $72.50, and then larger support around Oct/Nov lows in high $60s.

Important thing is we're also still keeping an eye on the transports going into the summer and what do they mean for the economy. Seeing signs of stagflation -- economy slowing in US and Canada, but inflation remains high.

Enjoys an oligopoly, but prefers CP which has a better footprint though you pay a higher multiple, which its growth justifies. Long term, CP will be a bigger winner. CN remains a fine business. He added on weakness. Sometimes it's worth buying momentum, but so is buying on pullback.

Likes the rail industry, essentially an oligopoly, can't replicate rail infrastructure. A "soft" cyclical -- pricing power, transports diverse goods. Synergies and cost savings from acquisition. Even though economy is slowing, they carry necessary goods, so OK as long as not an outright recession. You can hold rails through the cycle. She owns CNR.

Their assets are irreplaceable. Buying KC Southern will take longer than expected to absorb, but eventually, they will offer a huge network across North America. Great managers and company. Be patient.

Peak at beginning of year, then down pretty significantly, 12% haircut. Next level to look at is $95-96 range, give or take $3. Perhaps even as low as $90. 

Always look at RSI against the S&P, and since 2023, rails have been down against the S&P. Now the rails are separating themselves from the S&P, so he expects a bit more weakness. Rails are usually good long-term stocks to buy.

Not a lot of competition, CNR is the only similar competitor. Barrier to competing is nearly insurmountable. Not founder-run, founder-own. Excellent job compounding shareholder wealth over the long term. Strong company, wide moat, expect 10-15% compounding long term.

Buy this one over CNR, hands down. Trades almost at 1.0 on price to growth.

The valuation is up to the mid 20's but it is typically 20 to 21 along with CN which is trading around that level now. The valuation is higher because of its major acquisition and better growth prospects. However the growth rate is probably not sustainable. He prefers CN because of its better valuation. In general railways' profit margins are good, over 20 % on the average.

Rails in NA are an oligopoly. CP acquisition of Kansas City Southern is probably the last one we'll see in NA. Can't really go wrong with either. CNR valuation is more appealing. Industry has lots of tailwinds. 

A bit soft recently on the back of earnings. Not building any more rails, cheapest way to transport lots of stuff including commodities. Likes it. Would add here. Rates have been fairly strong. Almost at full capacity.

Both CNR and CP are core holdings for him. He "likes his children equally", though for different reasons.

He sold this recently. It is a great company but the valuation is too high: 23 or 24 times this year's expected earnings. There are some cyclical headwinds in the short term and there is the Kansas City acquisition. Also there are warning flags on operating efficiencies.