Canadian Pacific Rail (CP.TO) Buy, Sell or Hold

Canadian Pacific Rail (CP.TO)

120.81

-0.80 (0.66%)

as of Jun 19, 2026, 8:00:01 pm Market Open.

305 watching

BUY

CP vs. CNR The takeover was a real love triangle. He's confident they'll get approval. You want to buy them into this weakness. 9% growth rate, 17.5x 2023 earnings. Will be a better entity going forward. CNR looks very good with their new strategy to better their OR over time. Both are to be owned at this point.

BUY ON WEAKNESS

He is looking at it, but he owns CNR-T right now. It is under a bit of pressure because of the acquisition. He is looking at buying it on weakness. CP-T will come out of this as a much stronger company.

BUY

With a longer timeline, you'll do well with this. It looks like they'll get away with the KSU merger to create a giant. Multiples are reasonable. The rails reflect the wider economy in coming years, and he expects both to do well. He expects earnings to grow to $5 within 2-3 years. Inevitably, some divestment but also synergy will happen in the merger to come. There may be some headaches in the first few years, but this deal will pay off.

BUY

KSU today announced it will accept CP's bid over CN. The rollercoaster ride at KSU continues. CP has pulled back in valuation. He likes CP. It's a good opportunity to pick up CP now as he expects integration with KSU. It now trades at a discount.

BUY

CN and CP Don't chase CN now. There's a bidding war by CN and CP for KSU. KS is talking to CP and he expects CP to win the war. He prefers CP. He's short CP, because he's long KSU. CP looks good in terms of earnings.

PAST TOP PICK

(A Top Pick May 14/20, Up 46%) Likes rails in general. Transports are an interesting place. For new money, he prefers logistics companies right now. Long-term, rails will continue to be attractive.

BUY ON WEAKNESS

If CP buys KSU or not CP and CN are wonderful businesses, near monopolies. His hunch is regulators won't allow either CN or CP to buy KSU, though the rails are certain. A 50/50 chance the deal will happen. If so, either CP or CN will do well with KSU, making the deal accretive. He doesn't see much risk in the deal. They've done a great job fixing their cost structure, but both rails trade at a rich more-than-20x forward PE.

COMMENT

CP today increased their offer to buy Kansas City Southern He owns none of the rails here, but owns FedEx and has long liked it and its management. This battle will go on for a while. Even if CP wins, it'll likely be a year before the deal closes, and CP will be worth $90 billion, on par with rival bidder CN. CN will still have bigger revenues than CP, while CP will carry more debt if CP wins the battle. So, CP would win the battle, but lose the war. It'll be interesting to see how much synergy CP can generate if CP wins. The short-term winner will be KCS shareholders.

COMMENT

CN vs. CP Easy. Go with CN. Latest news is a letter saying that the merger with KSU is not in the public interest. If the merger happens, it will be accretive long-term. If not, CN remains attractive, trading at 18x 2023 earnings while growing at 11%. At times, he's a CP guy, but here he'd pick CNR. [Note: some audio problems]

HOLD

CP vs. CNR Owns CNR. Numbers positive over the last little while, but the KSU acquisition may hamper them going into next year, with the stock moving sideways. Rail industry as a whole is great: limited competition, hard to duplicate, good pricing power, sweet spot of transportation. KSU acquisition will enhance CNR's business. Forest fires are affecting the backlog, but this is short term.

BUY

Allan Tong’s Discover Picks CP boasts steady revenues and a slightly lower PE than CN at 24.34x vs. 26.47x. Also, CP's stock has risen while CN's has slid since KSU signalled it's preference for CN bid. In fact, CP has leapt 52% since my original call (excluding the current 0.8% dividend). Year to date, CP has climbed over 9% while CP has underperformed at -7.4%. CN has won the war long-term, but CP has claimed the short-term victory. Read Looking back after 100 weeks of Hot TSX Stocks: BAM, Rails, Garbage for our full analysis.

BUY ON WEAKNESS

East-west rail lines. Their recent acquisition failure means they don't have access to Mexico. About 27 times earnings. It is probably a little rich. Monitor it and if it takes a nose dive then it is a time to step in.

BUY

Good time to own all the rails. Supply chain bottlenecks. Developed world is flush with cash, and they're buying stuff. Trades at 23x earnings, on par with peers. Consolation prize from the KSU failed deal, which could come back to shareholders. Good, steady double-digit or high single-digit growth.

HOLD

Rails are oligopolies, just like pipelines. Rail is the cheapest way to ship a lot of goods. They'll remain solidly profitable. He has no worries about the CN acquisition.

WAIT

Not the time to buy. It got outmaneuvered with the KSU deal. He's not worried they'll struggle without KSU. He's worried they'll go and do something that makes less sense only to prove that the acquisition path is the right way forward. Wait for 4-6 months. He prefers CN.

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Canadian Pacific Rail (CP.TO)