Canadian National R.R. (CNR.TO)

Transportation industry is doing incredibly well right now. This one had a huge push over the last few days and is starting to outperform the market. The period of seasonal strength for transportation stocks predominantly come to an end when industrial stocks come to an end, which is the beginning of May. A good trade during the summertime is to actually Short some of these things. July through to October is the weakest time for these transportation stocks. He would be looking to take profits here.

Likes this name. Uses it for hedging purposes because he thinks Canadian Pacific (CP-T) is overvalued where he has a Short position. This has been a very rough winter, so when Q1 results come out for the rails, both Canadian companies are going to have had a pretty tough time. He would not buy before the Q1 numbers.

Be careful in rail because multiples are high, Canadian and US rails. Wait to see how they come out with the winter weather. Would not own it right now.

(Market Call Minute.) Because of valuation, he rates this as a Hold. PE multiple is pretty high here.

Rails over the last year or two have had a tremendous run. A lot of it has to do with changes in their business mix. Additional capacity in oil by rail is profitable. In the long run it is hard to see why the earnings should advance so far ahead of the economies of their countries. Both our railroads are more than reflecting our economic improvements well into the future. CNR is priced a little more sensibly than CP.

The best run rail in North America. It is a play on Canadian GDP. It is a slow, get rich story. It is quite expensive. Thinks you will be fine, though, if you buy it.

Continue to hold. She would wait for a pull back.

Sold half of his position because it got expensive (CP-T is even more so). Not much of a yield any more. He is holding on because the dynamics of the business are still very strong. US Rails are generally cheaper. There has been a big move to oil by rail. If it goes up any more he may exit the whole thing. He would deploy the money in a US rail.

A favourite rail. He would buy it 5 or 10% lower. It is a play on North American growth. New rail cars will be super safe compared to older ones, for transporting oil.

(Top Pick Feb 27/13, Up 24.00%) Still likes it. It was running into resistance. It has subsequently broken out. Winter weather has been a problem, but they handled it relatively well. A big back long in grain to move. Lots of oil to move. Multiple less than CP. A good longer term investment. Multiple is a little high for a cyclical company, but he is willing to stay with it.

Seasonality for railway stocks is normally positive between now and around the 1^st week in May. Technically, the chart is great. A lot of upward trends, just recently broke to new highs and is above its 20 day moving average. You might want to try and buy it back slightly lower than the current levels but it looks like it wants to go higher.

Hard to argue how well they have done in the past couple of years in generating earnings and improving operating ratios and now Canadian Pacific (CP-T) is doing the same thing. The only negative he would throw out would be the valuations. You are paying a very high multiple for the earnings right now on both of these.

Both railways had a big run. CP has been an incredible turnaround. He decided CN would be the better one to go for because of diversification.

Rails have generally done quite well. Both Canadian Pacific (CPR-T) and this one reported decent quarters. This company is very well run and has good volume growth. She would wait for it to come back a little.

Very North American focused. North-South is their network path. As business picks up in North America, they benefit. Crude by rail has been great. In the past, their traffic has been as much as 25% lumber so as homebuilding picks up and lumber picks up this should be good. Chemicals are a big part of what they ship and as manufacturing goes through a little bit of a rebirth in North America because of low energy prices, he feels a lot of stuff is going to continue to be shipped by rail. Still a long runway in front of them.