Canadian National Railway (TSX:CNR)(NYSE:CNI) has reached a new 52-week low after the stock briefly dipped into oversold territory. The railway operator has had a strong year with increasing demand forcing the company to go on a “hiring spree” in order to meet demand.
However, despite the strong performance the company has had in the past year, the share price has declined 12% in the past three months and the worst may not be over as CN Rail announced earlier this month that Luc Jobin, the company’s CEO, would be resigning from his post. Investors hate uncertainty, and when an executive leaves a company it could signal some instability and unrest among the ranks.
The company is in the midst of its search for a permanent replacement, and until that happens it might be hard for the stock to gain much traction. Sometimes the factors that impact a company’s stock price the most have very little to do with the company’s overall performance.
In its most recent quarter, CN Rail saw its top line grow by 2% while profits more than doubled from a year ago. With demand on the rise and the economy continuing to perform strong, there are many reasons why investors should be optimistic about the company’s long-term future.
While the stock may be trading at over four times its book value, its price-to-earnings ratio is less than 13, suggesting that it could still be a good value buy. If you’re bullish on the Canadian economy and expect that the need to transport goods will remain strong, then CN Rail could be a great addition to your portfolio today.
