Canadian National R.R. (CNR.TO)

(His Top Pick on Sept 23/13.) Thinks this is going to have to rest awhile. Likes this on a long-term basis. If it runs a little, he might take some off the table. If it sold back down to $55, he would probably add to some of his accounts.

There is a chance for a dividend increase. Their dividend is fairly small relative to their cash flow. The problem he has with Canadian railroads is that they have done so well and so fast. Trading at 20X earnings which seems to be fairly aggressive in an industry that can grow a whole lot more than the GDP of the economy they sit in. Trading at more than 4X BV.

Continues to like this. Did a stock split, which is a good sign for companies. Really well managed company. Sees continued efficiencies but the macro picture, which is why she owns it, is very positive. You have not just economic activity increasing, but there are new uses for the rail lines, including the shipping of crude.

Railways have had a huge run and US investors have been piling into these things. This one has been an exceptionally well run railway and has performed exceptionally well. Right now they are trading at exceptionally high valuations. There is a modest reacceleration in the economy, which gets investors excited. He would be looking for areas where there is some weakness and avoiding the rails right now.

One of the best managed railways in North America. They’ll continue to grow, probably earning 5%-10% a year. Not cheap, trading at above average PE multiples for their entire history. As long as the economy continues to grow and they are managed well, he thinks they can hold it in with a total return of maybe 7%-8%. Hard for him to see much upside here. Dividend yield of 1.4%.

Typically, when a stock is over $100, it splits for a more manageable stock price. This really doesn’t change anything. The valuation on this is high. If you own, he would consider taking some money off the table.

Railways have done extremely well and he thinks they are priced to perfection. Last earnings announcements have been absolutely fantastic. Operating ratio now is in the 60s. Rails have done very well with grain shipments, and oils and are going to play a very, very important part going forward on oil. Would be a buyer on a pull back in the marketplace.

Multiple is pushing towards the edge of where he feels uncomfortable. Quite a bit cheaper than Canadian Pacific (CP-T). Also, on forward estimates, you can get down to about 16X next years earnings. Great company and great stock. If you are at all confident about the economy in 2014, you could continue to hold it but, if you own, it might be time to trim a little bit.

A great company. There may be some additional upside because of a split but it would be minor. The yield will be the same after the split. You are buying it for the earnings and dividend growth.

Often stocks tend to perform better post-split. Caller should have sold only half. He likes the rails and there is some potential here. Next point is when the Fed starts tapering.

Have announced a stock split. The most efficiently run railroad in the North America with operations in Canada and the US. US recovering economy will push volumes up. There is further growth in it.

Stock split is coming out on Monday. Would this be good for a RRIF and would you wait to purchase? He likes this company but feels it is fully priced at these levels, especially compared to some of the US rails. If you could see it back at $103, he would look at it. Wait for the split and wait to see how far this market is going to go. It is a little overbought.

If you own and have had really nice profits, he would trim a bit. If you want to keep a core position, this is a really good company. Remember that as the economy picks up, your loadings are going to get higher, not lower and they have done a fabulous job of reducing costs on this rail line.

(A top pick Oct 25/12. Up 38.53%.) Growth in the global economy is primarily North America, which is great for this company. It has North, South and East/West routes.

Lagging behind Canadian Pacific (CP-T) because CP has received a lot of attention with their shareholder activism perspective. This company has picked up and is at an all-time high right now. He continues to like what they are doing. Their business is much broader in North America with a north-south axis as well. This is his preferred pick.