Canadian Pacific Rail

CP-T

TSE:CP

344.64
0.68 (0.20%)
The Canadian Pacific Railway, also known formerly as CP Rail between 1968 and 1996, is a historic Canadian Class I railroad incorporated in 1881.
More at Wikipedia

Analysis and Opinions about CP-T

Signal
Opinion
Expert
BUY
BUY
December 5, 2016

He likes rails. They are unreplicatable networks. They are diversified. But at any given point you have things that are working and things that are not. Autos are at cyclical peaks. Grain will rebound. He thinks you will get double digit earnings growth going forward. But it won’t be in a straight line.

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He likes rails. They are unreplicatable networks. They are diversified. But at any given point you have things that are working and things that are not. Autos are at cyclical peaks. Grain will rebound. He thinks you will get double digit earnings growth going forward. But it won’t be in a straight line.

BUY
BUY
October 13, 2016

The fundamentals are good. They are reducing the operating ratio and he thinks this is a good long term hold.

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The fundamentals are good. They are reducing the operating ratio and he thinks this is a good long term hold.

COMMENT
COMMENT
October 11, 2016

At the present time this is trading just about smack on its intrinsic value, which he calculates to be at about $200. It is also trading at one of his technical resistant points. Putting them together, he doesn’t see that much upside potential. Earnings forecasts have flattened right out, so there is no momentum coming from the earnings side. Also, it is technically expensive, and he doesn’t like it.

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At the present time this is trading just about smack on its intrinsic value, which he calculates to be at about $200. It is also trading at one of his technical resistant points. Putting them together, he doesn’t see that much upside potential. Earnings forecasts have flattened right out, so there is no momentum coming from the earnings side. Also, it is technically expensive, and he doesn’t like it.

COMMENT
COMMENT
October 5, 2016

The stock has done very, very well, and thinks there will be a continued economic strength that will surprise people. Probably not a terrible investment going forward.

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The stock has done very, very well, and thinks there will be a continued economic strength that will surprise people. Probably not a terrible investment going forward.

BUY WEAKNESS
BUY WEAKNESS
September 23, 2016

The rails have probably bottomed here. We are seeing the top line growth falling, starting to come back. The story on this is that they have been cheaper than Canadian National (CNR-T) and probably have more cost cutting tools than their peers. He would buy this on a bit of a pullback.

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Canadian Pacific Rail (CP-T)
September 23, 2016

The rails have probably bottomed here. We are seeing the top line growth falling, starting to come back. The story on this is that they have been cheaper than Canadian National (CNR-T) and probably have more cost cutting tools than their peers. He would buy this on a bit of a pullback.

COMMENT
COMMENT
September 13, 2016

Canadian National (CNR-T) or Canadian Pacific (CP-T)? When the market started to weaken last spring, one of the things that led the market to the downside was Transports. Over the last few weeks, transports have been picking up relative to the market, which is encouraging for the market. This is an interesting time to take a look at the transports. He has a simple view. CN is North- South; US-Mexico. CP is more about East-West and more about commodities and more about global trade. He prefers to make the trade on the North American block. CN right now is about 15% of forest products, and the housing market in the US has been growing now at about 10%. He would prefer Canadian National at this point.

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Canadian Pacific Rail (CP-T)
September 13, 2016

Canadian National (CNR-T) or Canadian Pacific (CP-T)? When the market started to weaken last spring, one of the things that led the market to the downside was Transports. Over the last few weeks, transports have been picking up relative to the market, which is encouraging for the market. This is an interesting time to take a look at the transports. He has a simple view. CN is North- South; US-Mexico. CP is more about East-West and more about commodities and more about global trade. He prefers to make the trade on the North American block. CN right now is about 15% of forest products, and the housing market in the US has been growing now at about 10%. He would prefer Canadian National at this point.

COMMENT
COMMENT
September 7, 2016

Grains have been a real pain lately, however a lot of it is in storage and there has been a very large grain crop, so he expects it will pick up later. Autos could be a bit of a risk over the next few years should North American production turn down. Intermodal volumes have fluctuated, depending on the quarter and depending on the rail. The nice thing about rails is that time is on your side. They are the more efficient way to move things. Over time, there is a real growth algorithm. Very good businesses over the long-term.

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Grains have been a real pain lately, however a lot of it is in storage and there has been a very large grain crop, so he expects it will pick up later. Autos could be a bit of a risk over the next few years should North American production turn down. Intermodal volumes have fluctuated, depending on the quarter and depending on the rail. The nice thing about rails is that time is on your side. They are the more efficient way to move things. Over time, there is a real growth algorithm. Very good businesses over the long-term.

HOLD
HOLD
August 29, 2016

You are at your limit in terms of price (EBV+6), and his model price of $198. But long term it looks pretty good. By next year EBV+6 will be $256. There is not an American railroad he likes.

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You are at your limit in terms of price (EBV+6), and his model price of $198. But long term it looks pretty good. By next year EBV+6 will be $256. There is not an American railroad he likes.

HOLD
HOLD
August 19, 2016

Has a cash ROE of about 45%, and this divided by the PE is about 3.5%, which is healthy and above the level of 2 that he likes to see. With consistent ROE generators, you want to hold them. However, at some point we are going to have another recession, and this will be a bit challenged, at which point it would be a good time to add to your holdings.

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Has a cash ROE of about 45%, and this divided by the PE is about 3.5%, which is healthy and above the level of 2 that he likes to see. With consistent ROE generators, you want to hold them. However, at some point we are going to have another recession, and this will be a bit challenged, at which point it would be a good time to add to your holdings.

COMMENT
COMMENT
August 17, 2016

Hunter Harrison brought in a team, and they have the same DNA that Hunter has, so things are going to be just fine when he retires. If we see any uptick globally, and we start to see freight traffic growth globally, you are going to see this and some of the other rails recover pretty well.

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Hunter Harrison brought in a team, and they have the same DNA that Hunter has, so things are going to be just fine when he retires. If we see any uptick globally, and we start to see freight traffic growth globally, you are going to see this and some of the other rails recover pretty well.

COMMENT
COMMENT
August 3, 2016

Bill Ackman owns a 6.7% stake in the company, worth about $1.9 billion Canadian, and is selling his shares. No one should react to something like this. If you are in the stock because he is, then it is time to get out. Commodity volumes in Canada are not great. This is a decent company and he would not Sell because one guy is in it. You are going to have to wait for the Canadian economy to fully recover to make any money. But it is a very well-run company.

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Bill Ackman owns a 6.7% stake in the company, worth about $1.9 billion Canadian, and is selling his shares. No one should react to something like this. If you are in the stock because he is, then it is time to get out. Commodity volumes in Canada are not great. This is a decent company and he would not Sell because one guy is in it. You are going to have to wait for the Canadian economy to fully recover to make any money. But it is a very well-run company.

HOLD
HOLD
June 21, 2016

(Market Call Minute.) Freight rate volumes are down 8% year-over-year, so you want to be careful.

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(Market Call Minute.) Freight rate volumes are down 8% year-over-year, so you want to be careful.

HOLD
HOLD
June 17, 2016

Canadian National (CNR-T) or Canadian Pacific (CP-T)? He owns CNR and prefers it, as it has less commodity exposure and more cross-border north/south from Mexico. The whole transportation division has been weak lately, but likes it as a long-term investment. You don’t have to run out and buy the rails at this time.

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Canadian National (CNR-T) or Canadian Pacific (CP-T)? He owns CNR and prefers it, as it has less commodity exposure and more cross-border north/south from Mexico. The whole transportation division has been weak lately, but likes it as a long-term investment. You don’t have to run out and buy the rails at this time.

COMMENT
COMMENT
June 16, 2016

Canadian National (CNR-T) or Canadian Pacific (CP-T)? He really likes the rails. He hasn’t followed this one too closely, so Canadian National would be his choice.

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Canadian National (CNR-T) or Canadian Pacific (CP-T)? He really likes the rails. He hasn’t followed this one too closely, so Canadian National would be his choice.

TOP PICK
TOP PICK
May 30, 2016

North American rails suffered from 2 things. Overall economic activity has been weaker and commodity volumes, specifically this rail, has been a lot lower. Coal has been abysmal and oil and gas has been down as well. Despite all this, it is going to grow earnings 10% this year with no top line growth, a combination of really good operational management and cost cutting and share buybacks. Feels earnings growth rate will be in a double digits next year.

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North American rails suffered from 2 things. Overall economic activity has been weaker and commodity volumes, specifically this rail, has been a lot lower. Coal has been abysmal and oil and gas has been down as well. Despite all this, it is going to grow earnings 10% this year with no top line growth, a combination of really good operational management and cost cutting and share buybacks. Feels earnings growth rate will be in a double digits next year.

COMMENT
COMMENT
May 18, 2016

(Market Call Minute.) Likes the rails, but prefers Canadian National (CNR-T). However, this one is fine.

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(Market Call Minute.) Likes the rails, but prefers Canadian National (CNR-T). However, this one is fine.

SELL
SELL
May 17, 2016

This went through a difficult time in 2014-2015, and technically went into a downward trend. Currently it is forming a bit of a base. Seasonally the stock has a history of moving higher from late January through to the beginning of May of each year. The problem is that this stock has double seasonality. After May the stock tends to go down. We have passed the period of seasonality, so now is the time to take some profits.

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This went through a difficult time in 2014-2015, and technically went into a downward trend. Currently it is forming a bit of a base. Seasonally the stock has a history of moving higher from late January through to the beginning of May of each year. The problem is that this stock has double seasonality. After May the stock tends to go down. We have passed the period of seasonality, so now is the time to take some profits.

COMMENT
COMMENT
May 9, 2016

Canadian National (CNR-T) or Canadian Pacific (CP-T)? Looking at the consensus projections, this is probably more attractive, but thinks they have more work to do in getting their house in order. (See Top Picks.)

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Canadian National (CNR-T) or Canadian Pacific (CP-T)? Looking at the consensus projections, this is probably more attractive, but thinks they have more work to do in getting their house in order. (See Top Picks.)

BUY
BUY
April 29, 2016

This got a little rich when they were transporting tons and tons of coal and oil. Shipments of coal have come back down dramatically, but the valuation has also come down. Earnings continue to stay flat and pick up a little. We are now back to about 15X next year’s earnings, which is pretty reasonable for this rail.

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This got a little rich when they were transporting tons and tons of coal and oil. Shipments of coal have come back down dramatically, but the valuation has also come down. Earnings continue to stay flat and pick up a little. We are now back to about 15X next year’s earnings, which is pretty reasonable for this rail.

COMMENT
COMMENT
April 27, 2016

Generally, buybacks are good for shareholders because they reduce shares outstanding. He would rather have a higher dividend, which would do better in this kind of a market environment.

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Generally, buybacks are good for shareholders because they reduce shares outstanding. He would rather have a higher dividend, which would do better in this kind of a market environment.

COMMENT
COMMENT
April 21, 2016

A solid, solid company. Probably the best performing rail in the last 3 years. Over the last 20 years, rails have been phenomenal performers. They are good, solid, long term businesses, and he would never argue with a client owning these. In the short term, they are under a bit of pressure. Their most profitable business is hauling commodities which is under pressure. He is not in a big hurry to buy these because he thinks they continue to be a bit weak in the short term.

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A solid, solid company. Probably the best performing rail in the last 3 years. Over the last 20 years, rails have been phenomenal performers. They are good, solid, long term businesses, and he would never argue with a client owning these. In the short term, they are under a bit of pressure. Their most profitable business is hauling commodities which is under pressure. He is not in a big hurry to buy these because he thinks they continue to be a bit weak in the short term.

WATCH
WATCH
April 14, 2016

CP-T vs. CNR-T. CP-T’s model price is $191.20, bang on its market price. CNR-T is cheaper, model price is $101.80, or a 25% upside. Buy CNR-T at $72.65.

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CP-T vs. CNR-T. CP-T’s model price is $191.20, bang on its market price. CNR-T is cheaper, model price is $101.80, or a 25% upside. Buy CNR-T at $72.65.

COMMENT
COMMENT
April 14, 2016

Owns Canadian National (CNR-T) and has been thinking about lightening up a little. Had always thought CP had gotten a little ahead of itself. Also, they keep getting off on these tangents of takeovers. He likes the rails. They are basically economy stocks, and have been showing growth. Feels they are reasonably priced right now.

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Owns Canadian National (CNR-T) and has been thinking about lightening up a little. Had always thought CP had gotten a little ahead of itself. Also, they keep getting off on these tangents of takeovers. He likes the rails. They are basically economy stocks, and have been showing growth. Feels they are reasonably priced right now.

COMMENT
COMMENT
April 12, 2016

This has just completed a reverse head and shoulders pattern, which is a bullish indicator. Seasonality on railroads is January 20 to May 18, which implies that you do have some time for this one.

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This has just completed a reverse head and shoulders pattern, which is a bullish indicator. Seasonality on railroads is January 20 to May 18, which implies that you do have some time for this one.

COMMENT
COMMENT
April 12, 2016

Decided that they can’t make a deal for Norfolk Southern (NSC-N). Too many regulatory hurdles and the board was not in favour of a deal. Buying CSX (CSX-Q) would be an easier deal for the regulators to approve because of the size and the territory it covers. However, it would run into much the same kind of obstacles.

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Decided that they can’t make a deal for Norfolk Southern (NSC-N). Too many regulatory hurdles and the board was not in favour of a deal. Buying CSX (CSX-Q) would be an easier deal for the regulators to approve because of the size and the territory it covers. However, it would run into much the same kind of obstacles.

WATCH
WATCH
April 4, 2016

CP-T has the north/south lines and CNR-T has the east/west and north/south. Hunter Harrison has turned things around. The efficiency ratio is gotten way down. Mergers and acquisitions would be fended off. A merger is probably not in the cards right now. Own CP for the growth over time of the company. All the rails are expensive right now.

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CP-T has the north/south lines and CNR-T has the east/west and north/south. Hunter Harrison has turned things around. The efficiency ratio is gotten way down. Mergers and acquisitions would be fended off. A merger is probably not in the cards right now. Own CP for the growth over time of the company. All the rails are expensive right now.

HOLD
HOLD
March 31, 2016

Pipelines move most of the oil going to market. The rail companies picked up incremental capacity, but that production has come off dramatically. CP-T’s volumes have come off. CNR-T is outperforming CP-T

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Pipelines move most of the oil going to market. The rail companies picked up incremental capacity, but that production has come off dramatically. CP-T’s volumes have come off. CNR-T is outperforming CP-T

TOP PICK
TOP PICK
March 31, 2016

This is a call on “no recession”. One of the risks is volume, particularly crude by rail and coal. If you were to take their crude by rail and their Teck Resources (TCK.B-T) to zero, which probably won’t happen, the stock would still be very cheap relative to its 10 year. This is a name with a lot of shock absorbers built in. A lot of bad news has already been built in. Sees it growing at 11.5% next year and the year after. If they can acquire Norfolk Southern (NCS-N), that would be accretive for them. Very cheap relative to Canadian National (CNR-T). They still have pretty good Cdn$ tailwinds. He can see this going to $210. Dividend yield of 0.81%.

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This is a call on “no recession”. One of the risks is volume, particularly crude by rail and coal. If you were to take their crude by rail and their Teck Resources (TCK.B-T) to zero, which probably won’t happen, the stock would still be very cheap relative to its 10 year. This is a name with a lot of shock absorbers built in. A lot of bad news has already been built in. Sees it growing at 11.5% next year and the year after. If they can acquire Norfolk Southern (NCS-N), that would be accretive for them. Very cheap relative to Canadian National (CNR-T). They still have pretty good Cdn$ tailwinds. He can see this going to $210. Dividend yield of 0.81%.

COMMENT
COMMENT
March 15, 2016

Very east/west in geography, and is looking to extend down more into the US, which is why it makes sense for them to acquire Norfolk Southern (NSC-N). They have a higher cost base, so if they spread that over an acquisition they become a bigger beneficiary. Not a bad place to hide. Being more Canadian, it is a little more exposed to energy, grain and a slower economy. Prefers the geography and lower costs of Canadian National (CNR-T), which he owns, along with CSX Corp. (CSX-Q).

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Very east/west in geography, and is looking to extend down more into the US, which is why it makes sense for them to acquire Norfolk Southern (NSC-N). They have a higher cost base, so if they spread that over an acquisition they become a bigger beneficiary. Not a bad place to hide. Being more Canadian, it is a little more exposed to energy, grain and a slower economy. Prefers the geography and lower costs of Canadian National (CNR-T), which he owns, along with CSX Corp. (CSX-Q).

HOLD
HOLD
March 3, 2016

If they acquire other railroads, all of the stocks are excessive from a historical point of view. It would be in the best interests of the shareholders of those companies to let CP-T acquire them. If it does not work out, then those companies have downside risks to their share prices.

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If they acquire other railroads, all of the stocks are excessive from a historical point of view. It would be in the best interests of the shareholders of those companies to let CP-T acquire them. If it does not work out, then those companies have downside risks to their share prices.

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