Canadian Pacific Rail (CP.TO)

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.

Commodity strength will be good for business. Top Canadian railway pick. Excellent business with strong business fundamentals. Core holding in portfolio. Will hold for long term. 

Railroads indicative of economic conditions - current share price reflecting economy. Recent M&A has panned out well. Expects demand for railways to continue. A defensive name, better options for major capital appreciation. Modest dividend that is relatively safe. 

She likes the railways but doesn't own them since they are economically sensitive. If choosing between them she would pick CN since historically it has a better management team and a better dividend - 2% as opposed to CP's 0.7%. Also CP is still digesting its large Kansas City acquisition.

He owns both. CP is the only one through Mexico-US-Canada.

Duopoly in Canada. Not building any more rails. Remains the cheapest mode of transportation for certain types of goods. Different, but both will do well.

The strongest rail company. Total revenues were up 53% YOY, operating income 10% and EPS 4%. They guided double-digit earnings growth in 2024. Synergies from the merger and a better economy will drive this company, said management.

CNR had the advantage in early days, with all kinds of government money spent on it. If he had to choose today, he'd pick CP. Seems to have an expansive view with KSU takeover, more aggressive growth strategy, better growth possibilities.

The rails face pressure from the current economy, but the economy will expand in the next 10 years. So, the rails will do well as they move goods. Yes, it's good to hold in a TFSA.

The rails trade in tandem. With CP buying Kansas City, CP now competes head-to-head with CNR which used to have more of a north-south network. He isn't jumping into these stocks, because of a possible recession later this year. If you're a long, long-term holder, holding rails isn't bad, but he wouldn't but them now.

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. 

Likes overall business. Technically, if line does not hold, stock could fall. If economic recession, stock price will fall. Would recommend half position, waiting for weakness. 

This and CN got hit by the wildfires, so they had lousy quarters. Otherwise, it depends on the harvest, commodities and housing (moving lumber). A good company, more efficient than CN. Own one or the other, which should do better in 2024.