Canadian National R.R.

(A Top Pick Jan 25/19, Up 13%) Will recover from last year's strike and tariffs. Targets $140 a year from now.

Freight backbone of the country. Top investor is Cascade LLC, the Bill Gates foundation, and the time horizon for an endowment fund is "forever". Not many companies are forever, and this is one. A great company. Very efficient. 24% ROE. Yield is 1.79%. (Analysts’ price target is $123.36)

Buy before earnings? He is not certain if he would buy it today -- so he would wait. Railroads are driven by economies, especially the industrial and agricultural sectors, and things are not growing. He does not think it is a compelling valuation -- trading over 4.5 times book and with a 20 PE. He would rather find other industrial picks, rather than the railroads.

(A Top Pick Feb 13/19, Up 32%) They will have a bad quarter, based on an analyst report, but looking ahead, the economy will continue to grow at a good pace and this will benefit CNR and the rails. CNR is protected because you can't easily duplicate their business. If the US-China trade war calms, CNR will do very well. Don't worry about the coming quarter, but look beyond that.

He’s bullish on 2020. He thinks volatility will decrease. He would buy puts. They have liquid options and by having a $115 put option that expires at the end of next year. You don’t have to sell your stock, but you buy insurance.

(A Top Pick Dec 28/18, Up 21%) A year ago, market sentiment was really bearish, though he was bullish. This was a contrarian call. There's more upside to come in CNR. Industrials will perform in 2020.

(A Top Pick Apr 09/19, Down 0.5%) He likes the rails. Headwinds include the global economy and the recent strike. Tailwinds will include stable trading now with the USMCA signed and the US-China trade deal entering phase one. CNR has good pricing power.

He feels comfortable continuing to own this. The strike was a short term issue. It is the most profitable railroad in North America. The Prince Rupert terminal is a gold mine he thinks. He prefers owning Canadian rail companies over US entities. Yield 1.8%

It is increasingly attractive. They are talking about their Prince-Rupert-of-the-East strategy. There are less utilized assets there. There is a lot of product moving from south China and it is cheaper to ship it through the Suez Canal and get it to the east coast of North America. A lot of manufacturing is moving out of China and to the south because of trade wars.

They did guide down due to lower volumes of crude and coal by rail. The stock has had a bit of a lift. He is still modelling 10% earnings growth for next year. If you think the economy is good going forward, this would be a good time to buy. He thinks you will be able to buy it cheaper.

He is seeing a rebound so some of these railroads are breaking out of multi-year channels they have been in which is not what you would see if the economy is slowing. You are starting to see some revisions up in earnings estimates.

Moving sideways since April. Incredibly good buy here. It's basically Canada in a stock. A bit of cyclicality. You never have to worry about it. It's a buy when it's down 16-17%. No proper Canadian portfolio should be without it.

He’s looked at it a little while ago. They are in the business of hauling tons of things. Total tonnage of haul hasn’t increased very much recently. Net, the amount hasn’t changed. They have increased prices, which you can’t do forever. It is a well-run business, but it could run into a wall when they can’t increase efficiency and price. Expensive at close to 20 times.