Generally, is not fond of the steel industry. Has had a tough time passing on price increases because of a higher cost of scrap steel. Highly sensitive to the state of the economy.
The bulk of capital spending is behind them. Future expansion will be covered from free cash flow. Stock dropped because production levels were below expectations, but this is not a problem. A tremendous opportunity. Buy on pullbacks.
Have not delivered on the cost cutting as expected. Rail stocks have come under pressure especially in a higher interest rate environment. Have had a lot of weather problems in western Canada.
Operationally, they are having trouble with freight rates because of the weakness of the US dollar exports from the US have been weaker. Feels the stock will stall here for a little bit.
A good company. Very wall run. They are acquisition oriented and have commented that if they can't get acquisitions, we'll consider changing into an income trust.
(A top pick December 16/03. Up 8%.) Believe in the resources area. Aluminum has lagged the rally and China will be creating a big demand. The merger with Pecheny will be very accretive to their earnings.
Rating
Big Win
Win
Neutral
Loss
Big Loss
