# Canadian National Railway Company (CNR.TO)



## Belguy

Do you own shares in CNR? If so, you are in good company---

http://www.theglobeandmail.com/glob...reholder-in-canadian-national/article1997052/

Is this stock currently a buy, hold, or sell??


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## Argonaut

I hold shares, great company all around. If I had to pick the most solid, conservative investment in the TSX this would be it. And Bill Gates is the largest shareholder and recently increased his position.


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## Taxsaver

In theory, we should follow the smart money. The question is: Is Bill Gates smart money?


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## Eder

I own some but wish their div was higher...if share target of $77 is achieved I'll shut up about the div.


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## Taxsaver

I will certainly monitor the price progress all week. Pure gamble: I believe that Bill Gates is an extremely intelligent person as he is a billionaire. He must know what he's doing. Let's say I buy $10,000 stocks at the opening of the stock market. Let's see how it would go.


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## donald

I bought 100 shares of cnr last mth,its been down all mth since ive bought it.Im new to investing but everything ive read says railroad stocks are a solid bedrock stock for a portfolio,low competition and as a dividend i think cnr has raised it for 46 yrs?could be wrong.Gotta like that gates is a major holder,cant be bad!Buffet is big on railroad too,standard and poor has a hold on it for now with alot of others,but its technicals says its in a bullish trend and the company forecast news wise is promising.


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## Taxsaver

donald said:


> I bought 100 shares of cnr last mth,its been down all mth since ive bought it.Im new to investing but everything ive read says railroad stocks are a solid bedrock stock for a portfolio,low competition and as a dividend i think cnr has raised it for 46 yrs?could be wrong.Gotta like that gates is a major holder,cant be bad!Buffet is big on railroad too,standard and poor has a hold on it for now with alot of others,but its technicals says its in a bullish trend and the company forecast news wise is promising.


I would not be surprised if it was Buffet who suggested to Gates to buy these stocks.


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## Taxsaver

Sorry to hear about that, Donald. Just look long term, it makes things easier to live with. If it goes much higher, you will be glad you kept your stocks. Did you put stop order on it in case the price goes down to a certain level?


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## the-royal-mail

I believe CNR stock history only goes back to privitization in 1995. It has always been a solid performer. 

However, I am a bit uncomfortable with how they run the company. Think of all those derailments, including that bad one that killed all the fish in that river in BC or Alberta. And the oil spill in that Alberta lake in the past couple of years. I'm all for efficiency and value but not at any price.


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## Toronto.gal

I bought the stock over a year ago [CNI] at just over $50 and now thinking of adding CP.

I think most big investors own such stocks for obvious reasons.


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## kcowan

Gates already held over 5% back in 2006. I guess he has been buying on the dips since then...looks to be 6% of his portfolio? It is nice to see that rich smart people like buying individual stocks!


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## Ethan

I bought 40 shares a couple of weeks ago in my TFSA. I'm looking to add 60 more shares as more funds become available (I've maxed my 2009-2011 contributions, so likely won't happen until January 2012).

I think its a great stock due to consistent earnings (in any market) and solid dividend growth. The dividend yield is low; if you hold the stock for the long-term and CNR continues to increase their dividend the yield will become attractive relative to your purchase price.

As another poster alluded to, Buffet is bullish on railroads in general.


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## Taxsaver

the-royal-mail said:


> I believe CNR stock history only goes back to privitization in 1995. It has always been a solid performer.
> 
> However, I am a bit uncomfortable with how they run the company. Think of all those derailments, including that bad one that killed all the fish in that river in BC or Alberta. And the oil spill in that Alberta lake in the past couple of years. I'm all for efficiency and value but not at any price.


The stock price seems to be derailing these days. (No pun intended)


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## fatcat

don't forget bill gates once wrote that no one would ever need more than 640K in a pc and he also wrote "the road ahead" which he famously ignored the world wide web, also paul allen has famously failed at several business ventures

my point is not to diss gates but to make the point that there is a huge dose of timing and luck in becoming a billionaire and it doesn't necessarily make you prescient 

having said that i would love to know who picked railroads first or did they arrive at the same time: gates or buffet

it seems to me that for a long term play, railroads are a pretty good bet simply due to carrying capacity per unit of fuel which is very high


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## HaroldCrump

Both Buffet and Gates are now diversifying.
There was a time when BRK had less than a dozen stocks total.
Not any more.
Also given the gigantic size of their portfolios, even a 1% investment in a company will make market moving news.
They are both now investing into stable and reliable companies and appear to be favoring stability over growth.
And of course it helps that both gentlemen are long time friends, play bridge together and one of them is donating all of his wealth to the other's charity


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## donald

Taxsaver,i bought cnr for a core holding as a steady safe conservative growth stock,did not put any stops on it,but i monitor it and will sell a portion if something dramatic would happen,but i think its unlikely,its a defensive stock.


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## Taxsaver

I really wish the best in the wonderful investment world! We may sometimes lose money, but it's always interesting and exciting. I take a loss as the price to pay for the excitement. Since I made my first investment (gold and silver), my brain has gone in overdrive. I talk and think only of money and investment! My co-workers and friend must be a bit tired of hearing me. However, I got some of them interested in managing their RRSP portfolio we have with our company. It's incredible how clueless most of my co-workers are about it! And I like it when they ask my advice. I can go the extra mile and help them with their RRSP. Several obtained a User ID and a password to take control of their finances.


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## donald

I hear you! i was drifting around the dark,everytime i went into my bank and sat down with my advisor at my bank,every time i went in there or was called for a review it felt like two dummies sitting across from one another(me and my advisor lol).The signed plastered on the wall asking how am i doing ect,the standard charts of compund interest and everything.I may very well underperform investing myself,but like you,i like the idea of making my decisions,only time will tell,it was a big step for me to switch to self-directed,just hope i aint buying at market tops...i still do have some growth funds inside my rrsp i have not sold off,and i do know ive got a crap load to learn.


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## Taxsaver

When you are like me, inexperienced and a novice in investment, it is important that you don't stay alone. That's why I'm here and in other discussion boards. I am extremely grateful to all those who helped me. Some people told me things on other boards that would have made others leave. But I put my ego aside. I knew the advice that was given to me was for my own good. I prefer to get great advise in a rude manner than getting bad advise with a smile.


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## donald

Agreed! some people get brusied like a orange,i too dont mind if someone would take a swipe at me and or correct me if im not seeing things clear,be interesting cnr reports there earnings today...shall see what happens.


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## Taxsaver

Good luck with earning announcements! 

Receiving good advice in a harsh manner? I call that tough love! I sometimes pay more attention when someone screams at me. I guess the other person just wants to make sure that I wake up.


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## Argonaut

CNR beat the estimates quite handily, should be a good day tomorrow. If so it'll put me in a better mood after tonight's heartbreaking Blackhawks loss. Hate the Canucks, oh so very much.


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## donald

Taxsaver:it went well buddy,those earnings.Argo nicely up last 2 days and they are increasing there div,should soften the hawks exit.Im crying the blues my canadians almost had it.


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## OhGreatGuru

Both CN & CP do well when commodities are in demand, because rail moves bulk commodities like wheat; coal, potash, base metal ores. US traffic may be down temporarily due to US economy, but shipments to China/Southeast Asia aren't likely to slow down in the foreseeable future. And then most of those containers of goods from China/SEA get distributed in North America by rail.


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## I'm Howard

Buy EWC or XIU or XIC, own them all.


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## zylon

Interesting seasonality chart for CN Rail from TimingTheMarket.ca

I interpret this to mean we could see a low in CNR going into end September (?)


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## Jungle

I finally bought a little on Thursday at 69 ish. Still a little pricy, but I needed something other than financial, telecom and energy in our portfolio. I hope it goes down some more in the market crash, I left room to add positions. S&P recomended a buy at a max price of about 65 ish. Good, quality investment though.


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## humble_pie

(note to argonaut) (he likes CN rail)

instead of a lonesome goog put how about a lonesome rail. Your margin could probably support one CNI jan 65P ...

short put = [long stk-short call]


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## Jungle

I also added more when it went down to $65 during the last dip. Brought my cost base down. 

We'll see how they make out today. Earnings release at 8AM.


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## Jungle

CNR beats estimates EPS 1.30 vs 1.24!!! 

CHOOOO CHOOOOOOOOOOOOOOOOO! Dividend increase!!!! .375/share from .325/ share!
CHAGA CHAGA
YEA


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## Toronto.gal

Jungle said:


> CHOOOO CHOOOOOOOOOOOOOOOOO! Dividend increase!!!! .375/share from .325/ share!
> CHAGA CHAGA
> YEA


Love your craze & enthusiasm; I'm very happy too.


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## Jungle

lol thanks!! 

Here's a song in my head that popped up

http://www.youtube.com/watch?v=B-DpRcxK_N8

Quad City DJ, cmon' 'n ride it!!


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## Jungle




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## Dibs

I'm wondering what people think of the CNR trying to suspend the Harrison's pension income of around 40 million, which lead to Pershing Square's offer to guarantee the 40 million in the event that CNR succeeds. 
http://www.theglobeandmail.com/globe-investor/cn-blocks-hunter-harrisons-pension/article2311913/


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## Jungle

One year earnings outlook disappoints investors; stock down 4% now.


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## webber22

It's bad luck to chirp good things about your stocks, especially in caps lock .


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## Ethan

Earnings beat estimates and they raised the dividend, but the stock is down 3.97% today.


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## Jungle

Earnings forecast lets investors down. Sorry those posts were bad luck, lesson learned. I believe CP reports this week also, but that stock looks way a head of its self too.


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## Toronto.gal

Ethan said:


> Earnings beat estimates and they raised the dividend, but the stock is down 3.97% today.


Sigh.....and yeah, it's all Jungle's fault.


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## marina628

Guess i saved 4% was going to buy some today ,slept in and then had to rush to Doctor's appointment. I do not own a rail stock yet ,on my things to do in 2012


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## Argonaut

Boy, I lost hundreds today (on paper). I like the quarter, but the outlook for railroads is what did it. Kansas City Southern was down twice as much. Almost at 2% yield now with the dividend increase, CNR still looks good.


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## Argonaut

http://www.canadianbusiness.com/art...r-q1-profit-surges-16-per-cent-to-775-million

Another good quarter, though the stock seems slow to react. Took a few hours to rise even though the results were known last night. This has happened before with CNR.. worth noting that it is probably a good buy after strong quarterly results.


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## Jungle

Yup, this is probably the best performing railway in North America right now. Nice history of increasing profit, dividend, lowering costs.


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## PMREdmonton

Railroads are great investments because:

1. They are a monopoly - no one else will build a railroad over their routes.

2. They are the lowest cost transportation provider

So they have two moats.

The only problem is they are pro-cyclical, cap-ex heavy and usually trade a significant premium to the market. However, I increasingly believe rail transport is the future in our energy starved future so I have stakes in CSX and NSC. I would like to get a tranche of CNR but they just zipped away from me a couple of months ago when they were around 72. I'll wait for the next pullback as they often trade with the news.


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## Jungle

Csx was more attractive based on price but does not have that low operating ratio like cnr. 
Also I think the run up in CP is a farse and only because that Bill Ackman is in the news nagging for better performance. Really, there has been no sign of better performance as their latest profits were helped by mild winter and sale of other assets. The operating ratio did not really come down, unlike cn. 
Everytime I see that cnr train I tell my boys to keep up the good work, lol
My 2 cents.


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## Argonaut

CN Rail has been my top performer this year so far. The long term uptrend is as steady as a railroad track. Nominally, $100 seems a good place to sell but I have no real reason to. It could pullback from there but I'm a long term if not permanent shareholder. Just mindful about when and where to put 1/5th of my TFSA contribution into it.

CNR is a top 3 stock worldwide in my mind. Anyone else riding this train?


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## 6811

I bought CNR at $90.78 in early January after selling a load of CBO that seemed to be going nowhere (still are). Wish I'd bought more CNR (up 7.79% and my best buy of this year so far), but wanted to diversify with some BNS, T, G and BCE (at 41.94 - up 5.6% and my second best buy YTD). 

CLU.C has been my best performer YTD ($15.67 on Dec 31, $17.23 today's close for a 9.96% gain). It's a long term hold I bought when the dollar was $1.04 US. 

Maybe we should start a new thread (if there isn't one already) on best YTD performers.


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## Jungle

This would be a nice one to drip, but I don't have enough shares to do so.


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## mrPPincer

One would need to invest over 25,500 at friday's closing price just to drip one full share, that's a lot of clams to put in one bucket unfortunately, too much for me.


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## ranbam

This is a long term hold for me and one of my best performing stocks. My yield on my original investment is now 4.8%.


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## feetfats

I own 23 shares and am starting to top it up as I go. My average purchase price is $77.45 (I am up 26%)

Whenever someone talks about sticking their toe in the stock market I recommend CNR to them because it's so steady. Unless something drastically changes I plan to keep adding to my CNR position for a very long time and I think that I may start to exit CNR when I am in retirement (that's a very long time from now) in order to find slightly higher yields. It would be pretty hard to do much with 1.76% but that may change between now and then.

It's my dream that this TFSA contribution room keeps growing my whole life and I could eventually have a large enough portfolio of steady stocks like this to boost our income in retirement tax free


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## daddybigbucks

Its a jungle out there. :stupid:

Looks like its time to trim the CNR portfolio and put the money into a real powerhouse railroad co. in CP.
Canadian Pacific Railroad is the choice of the new generation.


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## Argonaut

With the fundamental comparison of CNR to CP, the latter's performance lately is truly baffling. They literally have to deliver on all outsized expectations to justify even the current share price. Kind of like Amazon.


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## Homerhomer

CNR is a fantastic company, railroads in general are pretty good investments. At the current levels I think US railroads are more attractive even with a bit of recent run up, both CSX and NSC are cheaper than CN, better yield, good dividend growth with increases each year, and they may be a better play on US recovery.
CP has a p/e of 28 :cower:


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## Jungle

Yes I started looking at US railroads, they are a little cheaper valuation wise. But even CNR long term at these levels is not a low risk stock. I'm so thankful to buy CNR when I did. 

And congrats to above poster who has yield on cost of 4.8%! Must have bought well below 50.


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## Ethan

Jungle said:


> And congrats to above poster who has yield on cost of 4.8%! Must have bought well below 50.


$1.72 annual dividend divided by 4.8% yield implies $35.83 purchase price.


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## crazyjackcsa

Ethan said:


> $1.72 annual dividend divided by 4.8% yield implies $35.83 purchase price.


And for everybody that thinks math is confusing. $35.83 is well below 50! :biggrin:


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## Ethan

I think CNR is the safest stock on the TSX. With CP, CNR has a duopoly over the Canadian rail market. In boom times and bust times, the Western provinces will need to export their commodities to market, and all non-coastal provinces need to import foreign goods. Rail is the most efficient (and therefore most environmentally friendly) method of transportation.

I have more invested in CNR than any other stock.


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## daddybigbucks

Argonaut said:


> With the fundamental comparison of CNR to CP, the latter's performance lately is truly baffling. They literally have to deliver on all outsized expectations to justify even the current share price. Kind of like Amazon.


Well, i started doing some reading on CP to see what all the rise is about.
The jist of it (for those on the board that don't know) CP "stole" CEO Hunter Harrison from CNR and Hunter is now transforming a bloated and sinking CP company into a streamlined king of the railroad. He sees it as becoming the premier railroad in Canada and North America.
He started out by slashing jobs to improve efficiency. He moved the main office from downtown Calgary to the Railyard in Calgary and saving 18M per year. They retired the old locomotives to cut down on servicing/repairs.
Now working on improving times and delivery/service with the newest technology.
Oil shipments have doubled since last year.

Quite the whirlwind of activity at CP, and this is very reminiscent of Ralph Klein coming into power and making Alberta into a juggernaut of the Canadian economy.

Will CP burst at the seams under all the new changes?
will CNR implode without the leadership of Mr. Harrison?
who knows but these RR stocks are fun to watch now.

That all being said, this is what i got from newspapers and i don't know anything about RR.


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## P_I

daddybigbucks said:


> will CNR implode without the leadership of Mr. Harrison?


Hunter Harrison retired from CN on Dec 31, 2009, source: CN Board of Directors recognizes outgoing President and CEO, E. Hunter Harrison, and he's come back out of retirement to run CP Rail via Pershing Square's proxy fight (source: Hunter Harrison named Canadian Pacific's new boss - Business - CBC News). 

CN has performed very well in the three years since Harrison retired, so I'd suggest that rules out implosion.


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## daddybigbucks

Then there is Keith Creel that came to CP from CNR as well.
kinda hard to get all the details perfect in a little blurb.

http://www.winnipegfreepress.com/business/canadian-pacific-hires-cn-operations-chief-as-harrisons-second-in-command-189647961.html?story=Canadian%20Pacific%20hires%20CN%20operations%20chief%20as%20Harrison%27s%20second-in-command

i guess all the long term CNR holders are a bit bitter about the situation and CP recent run up, but i'm just trying to bring some info up.


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## P_I

daddybigbucks said:


> i guess all the long term CNR holders are a bit bitter about the situation and CP recent run up, but i'm just trying to bring some info up.


No bitterness here. Been a CN Rail stock holder since 2005, cost basis is $37.30 and am very happy owning a very well run rail operation, with an excellent and deep management team and tremendous operation efficiency that have been proven over a number business cycles.


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## Synergy

> Canadian National’s results benefited from a jump in petroleum and chemicals revenue and gains in intermodal sales. The company said it will split its stock 2-for-1 and buy back as many as 15 million shares of the outstanding total, in the next year.


I've been wanting to start a position in CNR, but I've been waiting for a better entry point (below $100). Would it be wise to wait this once out to see how the stock split plays out?



> The share split will take the form of a stock dividend, with shareholders receiving one extra common share for each share held. The stock dividend will be payable on Nov. 29 to shareholders of record at the close of business on Nov. 15, the company said.


http://www.bloomberg.com/news/2013-...l-profit-beats-estimates-as-volume-rises.html


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## My Own Advisor

Need to save my money to get in after that 2-for-1 split, but it's only a dividend split???

"The share split will take the form of a stock dividend, with shareholders receiving one extra common share for each share held. The stock dividend will be payable on Nov. 29 to shareholders of record at the close of business on Nov. 15, the company said. The board approved a fourth-quarter dividend of 21.5 Canadian cents a share, post split, to be paid on Dec. 31, to shareholders of record on Dec. 10, the company said."


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## Jungle

It's a "stock" dividend. You will get double the shares and the price of the stock is cut in half. No change in value of your holdings or the company.


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## mrPPincer

Nice, the share price has gone too high mine to drip a single share, this split will fix that.


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## My Own Advisor

OK, I must have misinterpreted...for some reason?? Thanks Jungle!


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## Jungle

Cnr is buying back about 4% in a share repurchase, how much should this increase the value of individual holdings?


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## mrPPincer

CNR up 4.41% today, love it!
World markets were a sea of red ink today including (marginally) TSE), yet due to my individual canadian stock holdings I'm still up $1000 bucks today, another record high for me


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## My Own Advisor

Nice MrPPincer, but for those of us that want to buy stocks like CNR...this is bad news.


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## doctrine

Concur, been wanting to get into CNR for a while. But a P/E of 17 with 6-8% earnings growth is not the best PEG ratio in the world and does suggest to me it's not impossible to get a correction eventually.. maybe by 2016!


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## GoldStone

Caught an analyst on the radio talking about CP and CNR. He said: valuations are too rich. if you don't own them - don't chase them. if own them - consider taking some profits.


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## mrPPincer

I was in under $100 including trading fees by a hair, my guess is there will be more buying opportunities at some point.


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## tinypotato

I don't see a reason to chase these in the current market or valuation. There will be better opportunities later.

However, if you're already in, there's no reason to sell just because an analyst says so.


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## donald

Anybody looking to add/get in post split?Stock has been on a tear obviously.......I'm overweight and thinking of selling some just so it isnt out of whack but looking @ it with ''fresh'' eyes i am not sure if i should rebalance
Thoughts on cnr?or even industrial stocks ect.....i like the growing div,but up 60% in 2 years.
*when do brokers usually re-set a split in a peasant acct anyways?been waiting for them to square this up in my account,anybody know?*


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## My Own Advisor

I'm thinking about starting a position non-registered. I wish I had more money to invest though.


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## donald

Do you own this or cp MOA in rsp/tfsa?
From my study this seems like one of the top div growers in the Canadian market.
Such a wide moat they have.
If I recall,didnt you have a few k you were looking to deploy from your divvy bank a couple weeks ago?you still waiting on a pull back?if not what did you pick up?


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## daddybigbucks

GoldStone said:


> Caught an analyst on the radio talking about CP and CNR. He said: valuations are too rich. if you don't own them - don't chase them. if own them - consider taking some profits.


I took profits on CP and CNR and now that i'm out, I wish i didnt.
If i still owned, i would hold.


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## Toronto.gal

donald said:


> when do brokers usually re-set a split in a *peasant* acct anyways? been waiting for them to square this up in my account,anybody know?*


In a 'peasant's account? That wasn't a typo, was it?  You have not been waiting that long since the split was recent. With my brokerage, it's 5 to 7 business days, so likely later in the week or next.

It's been a hold for me since I purchased some 4 years ago with no plans to sell.


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## gibor365

I was thinking to initiate position in railways for some time, but it's always too expensive....


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## My Own Advisor

@donald,

I was waiting for the stock to split. My TFSA is full and RRSP is getting close to being maxed out, and likely will be (maxed out) with contribution room within the year, so likely going to buy and hold CNR non-registered. 

I don't own CP yet.

I had some money in my RRSP, but now gone. My most recent buy in the U.S. was KMI:US.


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## donald

Kinder,nice income stock......I am a div investor also BUT....from the reading of the landscape,i really do think a rotation will/is taking place(short term)
I know it is not the playbook of a div investor but are you a little hesitant buying higher yields income stocks going forward MOA?
You targeting any lower yield stocks(us or cdn?)I know kmi is a grower also but it does seem like the phase of rushing for income is ending....you agree?


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## donald

T.g.....was not a typo,i'm sure they update the data quicker for a client holding thousands of shares,no?the rich are more demanding than a guy holding a lot!
Regardless in this day and age it should be almost instant.....still waiting to see it in my acct.
freaking slow imo!I like order in my acct.


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## My Own Advisor

Correct donald. I'm looking for companies that pay dividends but they don't necessarily have to pay high yields. I am very hesitant to buy high yield stocks going forward.


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## Toronto.gal

donald said:


> T.g.....was not a typo,i'm sure they update the data quicker for a client holding thousands of shares,no?


I knew it had not been a typo, but LOL, I had not thought the above; I thought you meant location. :biggrin:

My account was updated yesterday [CIBC], and now see the shares x 2. 

Why so impatient when the split took place just days, not weeks ago? And what difference does it make anyway?


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## Killer Z

Over 10 years of steady growth .......I have been wanting to start a position in CNR for quite some time .......I think it may happen this week.


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## My Own Advisor

Recently started my position as well. Finally... Will continue to buy under $58 or lower when I find the money.


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## donald

Anybody see the drop in ksu?(kansas city southern)plunged 15% last week,(coal issues)
anyways,i know this is a cnr thread but it is a peer in the sector.
I don't know much about this company but it seems pretty drastic for a rail road to drop like that on missed earnings!(railroad index dropped only 3.5%)
Anybody notice ksu and if this is a op?
apologies if this is mis-placed.


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## Synergy

Killer Z said:


> Over 10 years of steady growth .......I have been wanting to start a position in CNR for quite some time .......I think it may happen this week.


Same here, my target price is $55 - getting close.


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## leeder

Still very expensive right now. P/B over 4 times; current P/E over 19 times. The price would be more reasonable between $53-54, but still wouldn't be cheap. Would love to see it pull back to about $47 or under, but doubtful it would happen.


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## doctrine

I would really like to see it around $50. While that may seem unlikely, it's only been about 6 months since it traded at that level. If it dropped below $52 then that would be a 20% correction from its 52 week high and I think a really good entry point.


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## Dom

[SUP][/SUP]


doctrine said:


> I would really like to see it around $50. While that may seem unlikely, it's only been about 6 months since it traded at that level. If it dropped below $52 then that would be a 20% correction from its 52 week high and I think a really good entry point.


Even at $52 I still feel CNR would be overvalued


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## My Own Advisor

Not sure it will ever go to $50 or $52. If so, I will buy there as well.


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## mrPPincer

Only 7 months ago I bought before the split at under $100 including trading costs.
Sold some at $116.30 later in rebalancing.

My guess is there's a correction happening at some point w buying opportunities.


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## fatcat

its a great long term hold whether you buy at 55, 52, 50 or 45


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## GoldStone

fatcat said:


> its a great long term hold whether you buy at 55, 52, 50 or 45


Can you post your valuation analysis? Or is it just a hunch?


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## Synergy

CNR Q4 earning release, share price pops 3% in after hours trading. Raises dividend by 25%

"CN Rail's operating ratio, a key efficiency measure, improved 4.1 points to 60.7 percent for the fourth quarter, but lagged CP Rail's 59.8 percent operating ratio. The ratio expresses operating costs as a percentage of revenue, so lower values are better."

http://ca.reuters.com/article/businessNews/idCAKBN0L02RE20150127

I picked up some CP recently as well. The Street suggest that both CN and CP are fully valued here. I'm still happy to pick away at them on pull backs.


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## Synergy

Conferance call is live for anyone interested (Q4 2014):
http://seekingalpha.com/article/285...0ik:be4e203e1318753e02ad54d88d3c0003&uprof=45


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## fatcat

GoldStone said:


> Can you post your valuation analysis? Or is it just a hunch?


i guess you would call it a hunch since i don't do valuations ... you can value a stock so many ways, correct ? ... plus, i'm too old and tired to even understand the numbers, i leave that to younger, more energetic young people and then i read their conclusions

it's an extremely well run railroad, it is a basically a usa business as much as a canadian so you are playing the american economy, oil is desperate for ways to get the hell out of dodge, fuel costs are dropping, railroads are extremely cost effective ways to move other goods ... every analysis i have read over the last 2 years has supported the stock strongly ... they are taking dividend raises very seriously .. i think railroads will deliver value for some time to come .. i hope to hold for a long time


----------



## My Own Advisor

This is one stock I want A BUNCH more of....eventually....need to save and save and save for this guy. It always seems expensive and then the price keeps going up!


----------



## Synergy

My Own Advisor said:


> This is one stock I want A BUNCH more of....eventually....need to save and save and save for this guy. It always seems expensive and then the price keeps going up!


Take a look at a one year chart, lots of opportunities to buy on dips! It was trading at $70 in October (dip one) and $73 in December (dip two). If there was only an app for that:biggrin:


----------



## jamesbe

Bought at 90 just like a year ago, maybe a little more. Stock split, almost back to 90. Woot!


----------



## Flash

Will this stock dip again for a while due to the strike? What are your toughts. Just bought it last week lel


----------



## gibor365

Flash said:


> Will this stock dip again for a while due to the strike? What are your toughts. Just bought it last week lel


 Always wanted to buy this stock and always it was too expensive to my liking.... May be soon


----------



## donald

Isn't it cp rail?strike?


----------



## Synergy

donald said:


> Isn't it cp rail?strike?


Yes it was CP. They announced the end of the strike this afternoon.



> Canadian Pacific Railway Ltd. and the Teamsters Canada Rail Conference agreed to go into mediated arbitration, ending a strike that began over the weekend, Labor Minister Kellie Leitch said


http://business.financialpost.com/2...uld-cost-canadian-economy-205-million-a-week/


----------



## Flash

My bad, sorry, thought it was CNR.


----------



## fatcat

the teamsters have been negotiating with cnr and have reached a deal
labor unrest has hit *both* rail companies


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## treva84

Earnings up 15% Q1 2014 to Q1 2015 yet price now down over 3%. I gotta scrounge some money together to buy more shares!!

http://www.marketwatch.com/story/ca...y-profit-rises-2015-04-20?link=MW_latest_news


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## doctrine

CNR is so expensive. If they can grow their earnings by 18% next year, they might drop to a forward P/E of 20. Ugh. I'd consider paying $60, but that will probably take a while to get back to.


----------



## treva84

doctrine said:


> CNR is so expensive. If they can grow their earnings by 18% next year, they might drop to a forward P/E of 20. Ugh. I'd consider paying $60, but that will probably take a while to get back to.


According to TDW, P/E for the Canadian Rail Industry is 24, with CNR being 21.7. It's below industry average, and is below the P/E for CP (28). It's also got a higher profit margin and lower debt to capital ration than CP. Granted, CNR had 24% income growth in 2014 vs CP growing 68%. On the flip side, in the last 5 years CNR has had only 1 negative year of income growth (-2.5% 2013 in ) while CP has had two (- 12.4% 2011; - 15.09% 2012). 

Where am I going with this? Despite the lack of investor confidence in it's ability to grow earnings, I'm thinking it's still going to be profitable and I'm hoping this will be a good value play in my dividend growth explore portfolio. I realize they have 1/2ed the projections for crude by rail for this year though, so we'll see what actually happens - at least they have a multi year history of growing dividends (CP doesn't, otherwise I'd just buy both). 

Now, to just wait the business days to transfer the money into my brokerage account :hopelessness:


----------



## plasmasnake

doctrine said:


> CNR is so expensive. If they can grow their earnings by 18% next year, they might drop to a forward P/E of 20. Ugh. I'd consider paying $60, but that will probably take a while to get back to.


Where are you getting those numbers? On Scotiabank's financial analysis I'm seeing an estimated EPS of $4.27 for 2015, and $4.83 for 2016, which is 13% growth. At the current $79.43 share price, that's a forward P/E of 18.6 and 16.44 for 2015 and 2016, respectively. Does that not sound reasonable?

I've wanted to own this stock for a while... I just wasn't sure when to jump in. Anybody else going for it?


----------



## AltaRed

Still a little rich for me but it is on my Watchlist. I think we will see some further drift downward as CNR "struggles" with reduced oil shipments.


----------



## doctrine

It's actually nice to see CNR at $79, as opposed to $83 when I last posted. I don't think it's going to hit $60, but $74, which would be a 20% drop from the 52 week high, would be a nice entry point, and one I might consider. It looks like it's technically weak, below the 50 and 200 day, so maybe it will happen. When's the last time CNR was below the 200 day?


----------



## leeder

What's your guy's entry point? I also like to see it cheaper, but the valuation only begins to look attractive at the $70 level or below.


----------



## Gumball

anyone adding/starting a position in CNR with the share price "on sale" the last few days? I just added to my position today... With the P/E under 19 and CN still looking at low double digit growth this year I couldn't resist...


----------



## Killer Z

I added today too. This is one of those positions that I simply add to whenever there is a pull back. It's a long term hold for me.


----------



## Synergy

I'll be adding to my positions in CNR & CP if this sell off continues. Charts aren't looking great though, they both blew through their 200 day MA's.


----------



## My Own Advisor

Want to buy CNR and CP, no cash right now. In saving mode to max out new TFSA limit. Ah well....


----------



## CPA Candidate

CN is in an established downtrend right now and the chart has broken down, I wouldn't buy until it levels off. You'll probably get a better chance to buy if you wait.

Overall, I think got CN got a little expensive and is now correcting.


----------



## My Own Advisor

Hopefully it will go lower. I have no money to invest anyhow unless I steal from my emergency fund. Are some stocks I want to own tanking an emergency?


----------



## AltaRed

CPA Candidate said:


> CN is in an established downtrend right now and the chart has broken down, I wouldn't buy until it levels off. You'll probably get a better chance to buy if you wait.
> 
> Overall, I think got CN got a little expensive and is now correcting.


To get back on to a straight line 5 year trend, it would have to get to circa $65.


----------



## Cal

Getting close to buy territory......lower....lower.....


----------



## londoncalling

My Own Advisor said:


> Hopefully it will go lower. I have no money to invest anyhow unless I steal from my emergency fund. Are some stocks I want to own tanking an emergency?


emergency, want and need are all subjective terms. :biggrin:
A 20% drop would allow me to dip into my emergency fund/credit line. Of course I wouldn't go all in. 

Cheers


----------



## doctrine

All of the railways are really rolling over, not just CNR. A lot of guidance is being thrown out on low coal and oil shipments. Although I thought $74 would be a great entry point, I think the downside risk is the $60 range. Just going to hang around for a bit.


----------



## My Own Advisor

Geez, if this gets to $60 that is GREAT.


----------



## thepitchedlink

60$....wow, that would be something. Maybe I'll sit on the sideline for a while longer..


----------



## Vicjai

I currently hold CNR and have sold a lot on the uptrend already. As of today closing, it sits at $74.96. I hope Doctrine is right that it can go down to $60 because that will give me an awesome price to get in again.


----------



## CPA Candidate

Looks like it is finding support around $74, spent about 6 trading days in the $74-75 range.

However it looks as though a cross of the 50 day below the 200 day is imminent. That could sent it lower.


----------



## martou30d

*CNR Canadian National Railway*

any thoughts on CNR? great Q2 earning numbers, but seems all railroad canadian-US went down, probably due to move of funds to other asset classes.

currently own 100 shares, looking to dollar cost average to bring my overall purchased price down. Hope it will visit under 100$ mark again before a rally.

Any of you own CNR, and can share your thoughts ? thanks


----------



## zylon

Welcome to the forum!



http://canadianmoneyforum.com/showthread.php/7076-Canadian-National-Railway-Company-(CNR-TO)


----------



## treva84

martou30d said:


> any thoughts on CNR? great Q2 earning numbers, but seems all railroad canadian-US went down, probably due to move of funds to other asset classes.
> 
> currently own 100 shares, looking to dollar cost average to bring my overall purchased price down. Hope it will visit under 100$ mark again before a rally.
> 
> Any of you own CNR, and can share your thoughts ? thanks


I own CNR and CP. I believe the pullback was due to the fact that Capex spending is in USD so a stronger USD hurts their income statement. 

I think CNR is a very well managed company that is shareholder friendly. It also has a fairly conservative balance sheet for a company that is so capital intensive. However I think it's overpriced. I think fair value is ~ $80. I've actually considered selling my position given this, but instead I'll just hold it and do nothing.


----------



## 30seconds

I bought some around $99 on the drop. Long term hold and I had been waiting to get in for to long. It could come down some more but ill take my chances and collect the dividend


----------



## james4beach

I merged this thread with the existing CNR thread, to avoid creating duplicates for the same topic.

martou30d: welcome to the forum! To answer your question, yes I own CNR shares. It's 15% of my total stock portfolio. I recently bought some more right around 100 CAD. However I do these purchases mechanically, so I did not consider the current CNR price or valuation when doing this purchase.


----------



## doctrine

I've been wanting to make this part of my portfolio for a while. $80 was what I considered fair value so far this year, but Q2 has revised that number upwards. I would put a fair price on CNR at $93-94 at the moment, which would be a P/E of around 17-18. Given it was at $74 just 14 months ago, I wouldn't necessarily chase it, but I wouldn't be surprised to see it hit an all-time high again either.


----------



## AltaRed

C'est la vie. I've been chasing this one for too long, due to Cdn valuations always seemingly materially greater than their USA equivalents. Some of that may be warranted, e.g. performance, but I think it is the dearth of options available here that drives P/E up so much. It's the pits buying high on a stock that has a low dividend yield. [OT] Maybe have to wait for a big wreck to happen in the Fraser Canyon to get a meaningful correction.[/OT]]


----------



## londoncalling

If we do get a major correction as it would seem most are waiting for I do hope to buy a Canadian rail. It would seem to me that is the only way possible for me to acquire. Like those above I have been chasing for a long time.

Cheers


----------



## martou30d

thank you all for your input, was also just watching it for awhile, but decided to pull trigger on little position and wait out for correction to bring P/E down. 

3rd quarter should make things interesting when senior director themselves talked about headwind coming on their last shareholder meeting for second half of 2017


----------



## Gumball

this has been one of my best performing stocks for quite some time now, hoping to get it into the kids RESP's...with our dollar going up and interest rates rising I am hoping for a high 80's entry point, who knows if I will see one though...I waited for it to go down from $88-89 earlier this year and "missed the train" for now


----------



## martou30d

With Ex-dividend in 2 days and stock back under 100$, I'm really tempted to firm on my position in CNR

currently own 100 shares, and maybe looking to buy another 200 hopefully around 98$/share

that way with 300 shares could DRIP 1 new share every quarter.

like you guys pointed out, our dollar moving up might bring head wind in near future, but more importantly i know it wouldn't be very safe to have close to 25% of my entire portfolio in 1 stock

any thoughts?? and don't be afraid to discourage me lol cheers


----------



## martou30d

hello james4beach. what do you mean by purchase mechanically??

also like i commented below looking to add on my current 100 share another 200 shares around current market 99$..
300 shares would get me enough dividend to DRIP 1 new share every quarter, but my entire portfolio would consist of 25% of CNR alone.
looking to hold for 25-30 years

any thoughts? thanks


----------



## OnlyMyOpinion

I'd be inclined to diversify your blue chips a bit more. It sounds like CNR is about 8% of your portfolio right now which is at the upper end of what most of us (but not all) strive for. The dca of one share per quarter is not a game changer at this point.
Of course if you are planning to add money to your portfolio fairly quickly to bring it's weighting back down, then you might go ahead. If you put another $120k in within the year it will drop to 12.5% of your portfolio, etc.


----------



## martou30d

OnlyMyOpinion said:


> I'd be inclined to diversify your blue chips a bit more. It sounds like CNR is about 8% of your portfolio right now which is at the upper end of what most of us (but not all) strive for. The dca of one share per quarter is not a game changer at this point.
> Of course if you are planning to add money to your portfolio fairly quickly to bring it's weighting back down, then you might go ahead. If you put another $120k in within the year it will drop to 12.5% of your portfolio, etc.


your absolutely right except for the part where i should add money lol

i know DCA for 1 share/quarter not really relevant but add to that no commission cost and can just go to sleep for 25 years... IMO because CNR is that kind of company that won't go anywhere for 100 years.


----------



## james4beach

martou30d said:


> hello james4beach. what do you mean by purchase mechanically??


I mean that really my main decision is that I want to buy the TSX index (more or less). Once I decide that, I go and buy CNR and some other stocks. That's what I mean by mechanical, that I just consider CNR (and a few other stocks) as proxies to the index, and really, I am trying to do "index investing".

One of the funny things about index investing is that you indiscriminately buy without considering valuations on individual stocks.



> but my entire portfolio would consist of 25% of CNR alone.


That's too much exposure to a single stock. Mine is now a little under 15% and even that is probably too high. It might be a better idea to keep your exposure to any single stock under 10%.

Any stock can become a crappy stock; it's always possible for management to ruin it, or for economic conditions to destroy a company. As great as CNR is (and I don't lose any sleep holding it) I recognize that its fortunes could change in the future. If that happens, I will re-evaluate and may possible dump it.


----------



## AltaRed

martou30d said:


> i know DCA for 1 share/quarter not really relevant but add to that no commission cost and can just go to sleep for 25 years... IMO because CNR is that kind of company that won't go anywhere for 100 years.


You are letting the tiny value of getting a commission free share cloud judgement on a much larger issue.... concentration (lack of diversification). Costs at the 2nd decimal point are not relevant. Use the cash dividends to help you DCA into a more balanced portfolio. How good would you feel if CNR went nowhere for a few years, or even declined more due to an economic recession?


----------



## martou30d

thanks all really appreciate the input and the honesty!!


----------



## gardner

I have a dividend-oriented portfolio and have mostly overlooked the railroads because the yield to price is generally low. CNR and CP are both strong dividend growers though, so maybe they belong in my portfolio anyway. I am inclined to go in with CNR rather than CP because it does pay higher dividend and the stock price puts dripable holdings more easily in reach.

Reading the last few pages of this thread, it seems like CNR is trading at a good price in the past month or so.

Between CP and CNR, is one more firmly entrenched in the US than the other? I see strong presence in the US market, not just the cross-border market as a plus in terms of strength in the face of trade protectionism.


----------



## AltaRed

As I understand it, CN has the larger US presence and thus its financials would be impacted more by the decline of the USD relative to the loonie. I also believe CN is more susceptible to 'oil by rail' ups and downs. That said, CN has better operating ratios so take a look at its P/E and ROE. Those metrics are worth a lot more than dividend yield...which is only one component of Total Return and in the case of rails, a smallish component. With low dividend payers, capital appreciation is worth a whole lot more.


----------



## like_to_retire

AltaRed said:


> ...... CN has better operating ratios so take a look at its P/E and ROE. Those metrics are worth a lot more than dividend yield...which is only one component of Total Return and in the case of rails, a smallish component. With low dividend payers, capital appreciation is worth a whole lot more.


Yeah, agree. I have a number of low dividend payers like CNR, and I expect something more from them than just pumping out my dividend every month. These fall into the Total Return category stock. They have dividends that are in the 1-2% range. To name a few, these include CTC-A.TO, MRU.TO, SAP.TO and CNR.TO.

ltr


----------



## fatcat

this is a long term core holding for me and my only industrial, i am pessimistic on pipelines in canada going forward and think that crude by rail revenue will hold up and it is their #2 revenue stream (along with chemicals)

also, bill gates has been the #1 shareholder since 2011 and buffet famously owns burlington northern ... 

railroads are very cost effective and relatively environmentally positive ways to move goods and they are fairly well built out for the next 100 years


----------



## Gumball

fatcat said:


> this is a long term core holding for me and my only industrial, i am pessimistic on pipelines in canada going forward and think that crude by rail revenue will hold up and it is their #2 revenue stream (along with chemicals)
> 
> also, bill gates has been the #1 shareholder since 2011 and buffet famously owns burlington northern ...
> 
> railroads are very cost effective and relatively environmentally positive ways to move goods and they are fairly well built out for the next 100 years


fatcat, may me a bit off-topic but still relevant to this thread, but do you care to share your reasons for pessimism on pipelines in Canada? I am curious as to your reasons... IPL and PPL have some big capital investments in the near future and I do see this as a buying opportunity for these stocks,


----------



## fatcat

Gumball said:


> fatcat, may me a bit off-topic but still relevant to this thread, but do you care to share your reasons for pessimism on pipelines in Canada? I am curious as to your reasons... IPL and PPL have some big capital investments in the near future and I do see this as a buying opportunity for these stocks,


i think that the there is a lack of political will, read, the prime minister is providing pathetic, lax leadership and trying to play both sides, he is letting the entire resource sector languish and i believe that environmentalists are going be sucessful in slowing and even stopping pipeline projects going forward ... the political winds are shifting and environmentalists, aided and abetted by a clueless, inattentive pm are winning


----------



## james4beach

Good point from fatcat above, that Bill Gates and Buffett (who work together by the way -- Gates is on the BRK board) both invest heavily in railroads.

However I don't interpret that as a forever thing. These people are well connected and they get in on business trends because they know a specific industry will be hot. But themes change, and these people change their investments over time, if warranted.

I have 20K in CNR, but no stock is "forever"


----------



## AltaRed

deleted


----------



## fatcat

james4beach said:


> Good point from fatcat above, that Bill Gates and Buffett (who work together by the way -- Gates is on the BRK board) both invest heavily in railroads.
> 
> However I don't interpret that as a forever thing. These people are well connected and they get in on business trends because they know a specific industry will be hot. But themes change, and these people change their investments over time, if warranted.
> 
> I have 20K in CNR, but no stock is "forever"


both bn and cnr are basically core economic industrial barometers, when the overall economy is strong they are likely to do well and vice versa ... rail vs trucking is still well tilted in rails favour in terms of weight of freight per mile for the money


----------



## Oldroe

Do you think the Tesla truck is going to out haul railroads. Or maybe this country and yours will get smaller.


----------



## fatcat

not exactly a dagger through the heart but i call something like this maybe a canary in a coal mine ....

*Canada's Desjardins mulls withdrawal from Kinder pipeline expansion*



> At the meeting last Thursday, Desjardins senior executives told aboriginal leaders the lender will consider their request to pull its financing for the C$7.4 billion ($6.1 billion) project, said Eugene Kung, a lawyer for the west coast Tsleil-Waututh Nation, who was at the event.
> 
> Desjardins is a minor lender for the project, but a potential pull back would go beyond an announcement in July when it temporarily suspended lending for future oil pipelines. Desjardins, the largest association of credit unions in North America, *said it may make the decision permanent this month, citing concerns about the impact pipelines may have on the environment.............*


----------



## Gumball

fatcat said:


> i think that the there is a lack of political will, read, the prime minister is providing pathetic, lax leadership and trying to play both sides, he is letting the entire resource sector languish and i believe that environmentalists are going be sucessful in slowing and even stopping pipeline projects going forward ... the political winds are shifting and environmentalists, aided and abetted by a clueless, inattentive pm are winning


thx for the reply fatcat...
pathetic pm is a good way to put it... long CN.... we'll see what happens..


----------



## TomB16

What is CN doing with the $7.24 per share it's earning, since it isn't distributing it to the owners?


----------



## AltaRed

TomB16 said:


> What is CN doing with the $7.24 per share it's earning, since it isn't distributing it to the owners?


Significant capital spending program in the range of $3B per year. Maintaining, upgrading and improving capacity on the lines, as well as rolling stock, takes a lot of money.


----------



## doctrine

This looks like a new all time high for CNR closing at $118.40. I bought a full position back in Dec at $98.9 and have been holding on. Although 20% in < 3 months is good, the index is up about 16% in the same time, but I'll take it. I don't think I would add here, it's definitely at the top end of my valuation range.


----------



## AltaRed

It clearly is one of my winners as well. It is riding the wave of strong commodity shipments and of more crude by rail yet to come. I wouldn't add here either and wouldn't be surprised to see it range bound for some time. I am happy to hold indefinitely and clip the dividends.


----------



## newfoundlander61

I have had this stock on my watch list for some time looking for an entry point. Any opinions on if todays closing is looking to be just that (a entry point). Hard to say if it will go much lower but no point in trying to time that. Thanks for any opinions.


----------



## dubmac

newfoundlander61 said:


> I have had this stock on my watch list for some time looking for an entry point. Any opinions on if todays closing is looking to be just that (a entry point). .


I started a position at the 114.00 point. It dropped by 10%. If it drops another 10% I'll buy more as it goes down.


----------



## londoncalling

I would consider entry at or $111-12 which is at or near the 52 week low.


----------



## agent99

The dividend is almost enough to cover inflation. So, when buying CNR, you have to be looking for growth in stock price. Looking back 20 years, it has certainly grown along with the economy in Canada and USA. CN no doubt also benefited from lack of pipelines. Looking ahead, hard to say what will happen. Every time I look at it, I decide against. Looking back that might have been a mistake. Looking forward. hard to know. Probably OK for those with long investment horizon.


----------



## doctrine

CNR is still expensive, $90-100 is closer to 16-17 times earnings which is where it was for years. And their growth is lower now than in the past. Under $90 would be a nice discount, although it hasn't been there since 2018.


----------



## Gumball

agent99 said:


> The dividend is almost enough to cover inflation.


Although the dividend is low, The annual dividend growth rate over the last decade is somewhere around 15%, your yield on cost (as well as total returns) would be quite high over the long run. Not to mention their low divi payout ratio and CN's sharebuybacks...

Long CNR


----------



## newfoundlander61

The way the markets are going it may go lower so we will keep an eye on it.


----------



## MrMatt

newfoundlander61 said:


> The way the markets are going it may go lower so we will keep an eye on it.


Regards railways. 

With the larger economy and markets, Covid-19 fear, political risk and increased threat of terrorism, I think it still a bit pricey.

I do want to pick some up, it really is a good proxy for the resources and agriculture.


----------



## newfoundlander61

Under $100 this morning will be looking for an entry point on this stock but with the amount of selling it may go much lower.


----------



## privateEquityExec

This is a great buy. An overall great company to keep in your portfolio forever. I've held a position for over a decade now.


----------



## james4beach

Bill Gates is the largest shareholder of CN Rail. Now, Bill & Melinda Gates are divorcing. Bill's holding company has already transferred a ton of CNR stock to Melinda, but perhaps more will be transferred to her?



> The biggest asset is Cascade Investment, which is run by money manager Michael Larson. Through Cascade, Gates has interests in real estate, energy and hospitality as well as public companies. Canadian National is the third-biggest public equity holding. Cascade transferred 14.1 million shares to Melinda, and has 87.3 million shares, which are owned by Bill, the regulatory filing shows.


So Melinda now has 14.1 million shares, making her a railroad tycoon. Choo choo!

Does this have any implications for CNR?


----------



## londoncalling

KC Southern to scrap CP deal after revised US$33.6B offer from CN - BNN Bloomberg 

the KC acquisition is in a few other threads but I chose to put it here as its looking to be going to CN.


----------



## newfoundlander61

At the current closing price would this stock be a decent entry point for adding a new position for holding in this sector. I have been considering NTR (totally different stock in all aspects) but with the recent news that CNR will be the only bidder this may be a good long term hold for a portfolio? Want to invest some cash ($20 -$25K) just sitting around in my non-reg account and put it to work. The Surface Transportation Board in the U.S. still has to approve the aquisition.


----------



## doctrine

While there is something to be said for buying maybe the only railroad you can, and they aren't making any more of them, they are paying a steep price - close to 40 times earnings. It might take CNR 20 years to pay off the acquisition. That's a long time for the economic situation to change. This is probably a good decision for 20 years from now, but it's much harder to say shorter term.


----------



## m3s

doctrine said:


> It might take CNR 20 years to pay off the acquisition. That's a long time for the economic situation to change. This is probably a good decision for 20 years from now, but it's much harder to say shorter term.


In 20 years the US will have tunnels, hyperloops and autonomous transportation.

Recently sold my CNR and more than doubled the funds since elsewhere


----------



## like_to_retire

m3s said:


> In 20 years the US will have tunnels, hyperloops and autonomous transportation.


I can't say I agree with your assessment. Hyperloops, tunnels underground, etc. are a dream that's been around for a long time and I suspect it will remain a dream. You can't put a shovel in the ground today without the pesky environmentalists shutting you down, and it's only going to get worse in that regard. 

It's predicted that passenger and freight activity will more than double by 2050. Rail is among the most energy efficient modes of transport for freight and passengers, and the infrastructure is already in place. There is a lot of innovation today in rail, and certainly it's one of the easier systems to automate. 

I own both CNR and CP.

ltr


----------



## m3s

Hyperloops are already being built in the US and other developed countries

It's actually much better for the environment. CNR and CP trains are an environmental disaster


----------



## AltaRed

I agree with LTR.

North American railways will be electrified and double/triple tracked long before other Jetson wonky stuff makes any impact whatsoever. Then there will be electrified 18 wheelers as well.

It takes decades just to add simple subway capacity.


----------



## m3s

I haven't seen CNR or CP plan anything for the future or electrification

Meanwhile other companies are developing electrified autonomous transport and more efficient tunneling

The derail stats of Canadian freight trains is appalling. The infrastructure is severely neglected


----------



## AltaRed

Just like there was a shift to diesel-electric from steam, there will be a shift to fully electrified locomotives. It will start on high volume, high capacity corridors and migrate from there. Climate change initiatives and carbon taxes will see to it. The entire network will never be fully electrified because economics will never exist to justify it but a large portion of it will be in more densely populated areas, like in Europe and Asia.


----------



## robertsclak

AltaRed said:


> Just like there was a shift to diesel-electric from steam, there will be a shift to fully electrified locomotives. It will start on high volume, high capacity corridors and migrate from there. Climate change initiatives and carbon taxes will see to it. The entire network will never be fully electrified because economics will never exist to justify it but a large portion of it will be in more densely populated areas, like in Europe and Asia.


CNR.TO I would like some opinions on buying CN at this level,looks quite attractive to me.


----------



## AltaRed

Depends on your view of the Kansas bid. CN has been beaten down because investors feel the bid is overreach. If it is the successful bid after this weekend, then CN stock price may go nowhere for at least a year while US regulators decide whether what they plan to do with the CN bid. It could actually drift down even further.


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## like_to_retire

I understand that CNR will also fund the US$700 million break fee owed to CP Rail. That's getting close to a billion Canadian dollars. A lot of money. 

CNR also has to pay US$1 billion to KCS if its voting trust isn't approved by the U.S. regulator.

So before anyone actually merges there's a couple billion in play. How can that be good for business.

I own both CP and CNR, so I guess the break fee will be a wash for me, but I don't like this situation too much.

ltr


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## robertsclak

like_to_retire said:


> I understand that CNR will also fund the US$700 million break fee owed to CP Rail. That's getting close to a billion Canadian dollars. A lot of money.
> 
> CNR also has to pay US$1 billion to KCS if its voting trust isn't approved by the U.S. regulator.
> 
> So before anyone actually merges there's a couple billion in play. How can that be good for business.
> 
> I own both CP and CNR, so I guess the break fee will be a wash for me, but I don't like this situation too much.
> 
> ltr


Thanks for the input,I bought some in mid 26$ and have bid at lower price. Time will tell,must have patience.


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## doctrine

Interestingly, there are 3 ways CN loses money on the bid:

-$700M US immediately to CP rail
-$1B US if the voting trust is not approved
-If the trust is approved but the deal is not, the loss to sell KCS, i.e. likely minimum $4.6B US, the delta between the CP and CN bid, if CN is forced to sell KCS to CP, should they decide to re-engage.

All told, CN could be out up to $7B Canadian versus a book value of $20B. CN has about $3.5B of net profit a year, of which half goes to the dividend. So if the takeover is not approved, it could take 4-5 years just to recover book value.

And if they win, it could still take them 20 years to pay off the debt, which will be $20B just for the deal as compared to $13B total debt prior. Even optimistically, it will consume the majority of their free cash flow for a decade. Dividend growth will be lower and potentially frozen or cut if a major recession hit.

You can perhaps see why the market is discounting the stock because in any scenario, it is pushing out future free cash flow generation far into the future and discounting it back. CNR was never a cheap stock to begin with either. If you like CNR and the deal, you will have plenty of opportunity to get in likely for years.


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## Retiredguy

I don't have any. AR, JB4 I believe you do, Doctrine or others anyone selling or sold b/c of the deal.

Doctrine before deal closes/is approved do you have a entry price in mind at which it would be worth the risks and a value if it all gets approved.


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## AltaRed

I have a full position and am really annoyed at CN but I will continue to hold, at least for foreseeable future. The STB may deny the trust within the month anyway and the deal is off at great expense.


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## doctrine

Retiredguy said:


> I don't have any. AR, JB4 I believe you do, Doctrine or others anyone selling or sold b/c of the deal.
> 
> Doctrine before deal closes/is approved do you have a entry price in mind at which it would be worth the risks and a value if it all gets approved.


I have been out of CNR since 2019. I would be on the sidelines as I don't see a rush and if it does close, I would like to see a few full quarters of results with the combined entity to see if they can actually maintain earnings per share.

If the price started going below $100 then maybe that would be enough to entice me back in. I note it has traded below $100 for at least a bit in every year for the last 5 so I don't see that as a stretch, even if it is a ways to go from here.


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## newfoundlander61

I noticed a CNR train yesterday going through our city and one of the cars had a old faded KCS sign on it. Never noticed that before, but would be easy to miss.


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## nobleea

Wow, up almost $20 in two days. Congrats. Guess the market didn't like the takeover!


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## AltaRed

As a CNR shareholder, I am relieved. These railways are obsessed with bigger is better to the detriment of their shareholders. Enough already!


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## Eder

. Oh well..."poof", dream gone replaced with a pot full of money....I'll keep my shares but don't intend to buy any more.


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## agent99

doctrine said:


> Interestingly, there are 3 ways CN loses money on the bid:
> 
> -$700M US immediately to CP rail
> *-$1B US if the voting trust is not approved*
> -If the trust is approved but the deal is not, the loss to sell KCS, i.e. likely minimum $4.6B US, the delta between the CP and CN bid, if CN is forced to sell KCS to CP, should they decide to re-engage.


Is it a done deal now that CN will not buy KCS? 
And this will cost CNR $1B?


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## like_to_retire

agent99 said:


> Is it a done deal now that CN will not buy KCS?


This situation never seems to be a done deal.

And, as if it wasn't complicated enough, now it seems Biden administration's influence enters the fray.

Watch this Bloomberg video and see if you can figure out anyone's next move because I can't.

ltr


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## AltaRed

Not necessarily over but it should be over. Yes, I believe the payments are due.

WaPo has a decent article on this today.


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## londoncalling

I really don't understand how a $1B loss results in a $20 upward movement in the share price. I bought in around $132 and thought the KCS offer was overpriced but the acquisition would provide an amazing moat with its Can-Mexico line. Happy to hold and curious to see how the story continues.


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## AltaRed

It is that the acquisition was an over-priced ego trip. The share price is up on the premise the deal is off.

It was a hare brained attempt anyway. There was no way the USA was going to allow one entity to control both lines to Mexico.


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## londoncalling

Thanks @AltaRed. I was of the mindset that the deal would be blocked by STB and that CNR had some large penalties to pay if they deal fell through. This did result in a lower price and entry opportunity for me. I just didn't expect such a jump (was around $147-8 in April) to its current price of $159. I also was suffering from a bit of FOMO when I made the purchase as I had always wanted to but CNR or CP and always thought it was over priced. In reality, you need to pay a premium for quality. Additional FOMO would have been if the deal had been approved. Even though CNR would have overpaid, the route would have created an amazing moat.


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## AltaRed

londoncalling said:


> Additional FOMO would have been if the deal had been approved. Even though CNR would have overpaid, the route would have created an amazing moat.


The US would never allow CNR to have pricing power of a near monopoly on the Mexico route. They would intervene in some form and regulate it, albeit that it itself would be good for a source of robust income (like a pipeline).


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## gardner

> Kansas City Southern picks Canadian Pacific's $31B bid for railroad — but it's not final yet
> Rival bidder Canadian National still has 5 days to negotiate amendments to its $33-billion offer





https://www.cbc.ca/news/canada/calgary/kansas-city-southern-canadian-pacific-bid-1.6173142



I hope CN gives up at this point. I doubt the US will allow either deal to go ahead, but it seems like the CN one has the strongest headwinds.


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## newfoundlander61

Is this deal that CP has apparently won, good long term for the stock or is CNR a better stock pick to own for this sector going forward.


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## agent99

I imagine both stocks will be fine long term and do provide some US exposure. Why pick just one? Own them both. A bit like choosing which bank to own. (I presently own just CN, but may add CP) 

I see some CN shareholders are unhappy! This might be a good move, although short term it has affected the stock, it seems.



> 12:26 PM EDT, 09/13/2021 (MT Newswires) -- Long-term shareholders CIFF Capital UK LP and The Children's Investment Master Fund, acting by their investment manager TCI Fund Management Limited, announced Monday they intend to requisition a timely special meeting of Canadian National Railway Company (CNR.TOI) shareholders shortly for the purpose of refreshing the current Board of Directors by adding four nominees who, it said, will provide the "deep" railroad operational experience the current Board lacks. TCI's four nominees are Gilbert Lamphere, Allison Landry, Rob Knight, and Paul Miller.
> 
> Also, TCI has identified Jim Vena as the outstanding candidate for the role of new CEO.
> 
> This comes after Kansas City Southern (KSU) over the weekend said it's backing out of a merger agreement with CN Rail and plans to accept a competing offer from Canadian Pacific Railway Ltd. (CP.TO, CP).
> 
> Near midday, CN acknowledged the announcement requisitioning a meeting of its shareholders. The company said it has not yet received the formal requisition from TCI. Once it is in receipt of it, CN will review it and comment further in due course.


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## Retiredguy

Excerpt from Financial Post (today)

"Were Canadian National to lose out to Canadian Pacific, it would receive from Kansas City Southern a US$700 million break-up fee and would be reimbursed for another US$700 million it paid Kansas City Southern to pass on to Canadian Pacific as a break-up fee for terminating their March deal. Canadian Pacific has said it will cover the cost of this US$1.4 billion that Kansas City Southern would owe Canadian National"


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## doctrine

All of this noise hasn't resulted in an increase to CNR's EPS which will continue to hover around $6 EPS. At $158 last week, it is 26 times earnings and there is not a significant difference between trailing and forward. It is nice they appear to be getting some of their money back though.


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## KaeJS

I have 3% of my portfolio in CNR and 3% of my portfolio in CP.

Just own both.


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## peterk

All this volatility from a railroad??

CNR is supposed to be one of my "stable" holdings, that smooths out the portfolio. Sheesh...


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## investor65

I'm surprised the stock keeps going down on news of the proxy fight with TCI.
I would have thought this would be a huge boon for CNR considering what we saw with CP and Bill Ackman.
Could this be a massive buying opportunity for CNR?
Maybe more experienced investors can shed more light on this.


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## KaeJS

CNR at $145 is not cheap.

Maybe if it dipped back to $130.


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## investor65

KaeJS said:


> CNR at $145 is not cheap.
> 
> Maybe if it dipped back to $130.


I really hope it does go back to $130 so I could load up.
I don't think it will. We shall see.


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## londoncalling

CN Submits Notice of Intent to File Responsive Application with the Surface Transportation Board (tmx.com) 

I am not well experienced in these types of applications. Would the duplicate line not already have been considered by the STB in the original CP application? How likely is the STB to approve CNs application? If this line is put up for sale I am sure other rails may express interest in its purchase. If CP doesn't intend to use the second line it would make sense to divest it as opposed to maintaining a rarely used line. However, it does open an opportunity for its competitors to the route. I guess that is why it comes down to the price of sale and the purchaser.


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## james4beach

I received a letter to shareholders warning about the influence of a foreign hedge fund (TCI) which has a conflict of interest, since TCI is the largest shareholder in CP.

This CN press release from a few days ago says CN has reached a mutual agreement with TCI by appointing two new board members.

It doesn't sound great to me that the owner of their competitor is able to _push out their CEO_, and replace their board members. They already got rid of CN's CEO.

Should we be concerned about TCI's power to harm the best interests of CN?


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