Canadian Pacific Rail (CP-T)

His firm switched from rails to trucking, a more cyclical and higher-torque way to get exposure to recovery in manufacturing and merchandising. Covid explosion in purchasing made for difficult comparisons later, so trucking experienced a 3-year "freight recession".

Still, there's no good reason to abandon the rails. They give you a good franchise and "forever" earnings power. Sector is largely an oligopoly. Those trains should still be rolling 100 years from now. 

Both are really good, monopoly-type businesses. On timing, don't do either right now. Tariff inflation hasn't happened yet, but it will. As that causes economic problems, it will affect the economically sensitive names. The NA economy is vulnerable right now.

That said, his preference is definitely CP. Now that it includes Mexico, its footprint is so unique. Growth profile gives them more upside on earnings, which provides a buffer during economic weakness. Both trade at less than 20x PE, but CP is more compelling, along with its phenomenal management team. An OK buy here, but be prepared to buy more if it does get hit. Perhaps buy 1/2 a position now, and then the other half later whether it goes up or down.

Probably some good value here. If you have a long-term investment horizon, not the worst idea to have a 1-2% position in the Canadian rails and just leave it alone. Better run than CNR, with more attractive growth upside. Doesn't have a strong conviction either way right now on CNR versus CP.

Things seem to be going well. The rails are such a bellwether on goods, manufacturing, and broader economy. Volume growth in mid-single digits in Q1, company says those volumes have accelerated in April and May. Noted strength in bulks (such as Canadian grain and fertilizer). Autos were steady, which is comforting. Cost and revenue synergies from the KSU integration. 

Company hopes that JV with shipping companies will drive more volume growth. His firm thinks there's more rerating potential in trucking, but this name is an outperformer through the cycles. 10-year total compound shareholder return of 11%, versus 9% for the TSX. High single-digit growth rate. Yield is ~2%.

Tariffs were an opportunity to buy at a discount. No alternative for Canadian commodities to get to the US. Next US House elections are in 18 months; if we start to see significant US pain from tariffs, they'll hit pause. Longer term, having a network to serve Canada/US/Mexico makes a ton of sense. Share buybacks and dividend increases. Buy and hold for a long time. Yield is 0.80%.

Prefers CNR on valuation. Lots of embedded synergies after the KSU acquisition, and if they don't meet targets the high valuation makes it vulnerable (especially in this market).

Very narrow trading range over last 5 years. Bought KSU 2-3 years ago, yet still in the trading range. Headwind from trade issues. Its network should be fantastic once the trade deals are settled. Pulled back guidance for the year to low double-digit EPS growth. Longer term, should see high single-digit revenue growth.

The trade deals will get done. Goods still need to be shipped. He's positive on it.

Are hurt by the trade war; volumes will decline. CP is more exposed to cars crossing the US border. Buying KC was a great strategy. The rails have never been this cheap, so this will do well in 5 years. Just painful to hold now. A quality company with strong pricing power. 

Negatively impacted by trade. Economically sensitive. Likes the business. With its broad North American footprint, likes it better than CNR. More earnings upside from cost-cutting from KSU acquisition. Margins and cashflow are great for the rails. Constructive longer term, once tariff issues get sorted. Wait for more weakness.

CP has more catalysts from the Kansas City merger, and a better growth rate. Both are getting more attractive. If we get the all clear on the economy, both names will be decent entry points. Though optimistic, he's still a bit afraid, and wouldn't step in just yet.

Owns both, core holdings. No one's building any more rails. Cheaper to ship commodities by rail than any other way. If an economic slowdown, traffic and volumes will slow down but it's still a pretty steady business. 

If the trade war goes on, everything gets more expensive and these two will be impacted negatively. But these events are always temporary. Trade wars are not good for inflation or the economy with US mid-term elections only 2 years away. He's trusting that rational minds will prevail.

Owned this years ago and should have hung on. Looking to get back into rails (possibly this name), hoping for a correction because of tariffs, but the market's too smart.

Its main business is a great one and they have sold off their non-core assets. At 23X earnings it trades at a premium to the sector. The buying of the Kansas City line gives them a franchise from Canada to Mexico. It is good to buy for the long term as well as CN Rail.

Good idea. She owns CNR. Together, CP and CNR have a duopoloy within Canada plus operations in the US. Rails have not performed that well this past year. Tariffs won't impact directly, but risk is that economic slowdown would affect volumes. CNR trades ~18x forward PE, and wide discount to CP, so she'd pick CNR.