Canadian National R.R. (CNR.TO)

No surprises in yesterday's results. Company expects KSU deal to be approved. Reaction to the deal is way overdone. CNR is positioned well, with or without KSU. Best in class management. Excellent operating metrics. Yield is 1.89%. (Analysts’ price target is $146.26)

If they did buy KSU, it would be a slight plus. If they don't, it wouldn't take away from CN's story. They have one of the premier network of all North American rails. If you believe that economic expansion continues, CN is well position. His only problem with all the rails is the slightly higher PE than he'd like to see. But long-term, CN is good to hold. He would buy this at $115, though, not now.

Really likes it, one of his larger positions. Bought more when it declined into the $120s. Being penalized by risk arbitrage and lots of debt. Not a lot of regulatory risk. KSU is a great way to connect Canada with the US. Will really have to sharpen their pencils to handle the debt.

Dynamics of the rail industry have always been good. High barriers to entry. Sustainable demand will lead to better pricing power, better margins, and free cashflow growth. With the KSU deal, would be one of the major players in NA. If the deal doesn't go through, stock may pop as CP's did. Yield is 1.86%. (Analysts’ price target is $145.75)

Exceptionally well run. Up until the last couple of years, a great secular growth story. The takeover of KSU will put a cap on the stock for the time being. Over the long haul, the absolute tonnage they've transported hasn't really increased. They've just become more efficient and raised prices. Stagnant profit growth. The KSU deal means a lot more debt, and a lot more shares outstanding. With valuations where they are, he'd take his money off the table.

21-22x earnings. Best rail network in NA, only to get better with KSU, especially tapping into auto plants. Well managed. Efficient, reliable. Cyclically advantaged, with a lot of freight moving. Strategically important asset and infrastructure.

Market outlook is somewhat cautious, and large cap Canadian is a good place to be if value outperforms growth. You have to pick your spots and this is it. Good pricing power, safety, cheap on the KSU headlines, critical infrastructure, somewhat defensive. Efficient in an ESG context. A win whether the deal goes through or not. Yield is 1.90%.

CNR will get the KSU. CNR has the growth to be stand alone. The deal is most likely accretive. Would buy this dip right now.

It's her preferred rail, which she likes, and has long owned this. The overhang in their proposed buy of Kansas City Southern, and this deal is still very early. KCS said they favour CN's bid over CP's. Now, CN is trading at a discount to its American peers, so you can begin nibbling here. Covid showed how vital the rails are to the economy, and no further rails will be built. Yes, CN will take on debt if they buy KCS, but long term this will benefit CN. If they don't get KCS, CN is still a good rail company.

CP is better suited to do the KSU deal than CN. Great things about rail are high barriers to entry, good pricing power, limited by rational competition, good volume growth means better margins and cashflow. Great industry to be in. KSU deal may take a long time, but will help the winner's bottom line. He owns CN.

CN vs. CP The transports are close to their highs as volumes are hitting historic highs. He can't choose one over the other until the Kansas City Southern deal is complete. Who will win? If you hold a position in either, just hold and wait. If you don't own at all, then maybe buy a small position in both. Then after the deal, trim the loser and increase the winner.