In the Canadian railroad sector, CP Rail (TSX:CP)(NYSE:CP) has been my top pick for some time, for a number of reasons. One of the best-run railroads in North America with very impressive operating metrics, CP has turned out to be one of the most stable and solid performers through the volatility we saw with the coronavirus pandemic. Even at these higher stock price levels, CP still provides investors with excellent value.
As a long-term duopoly, the railroad sector CP operates in has been extremely lucrative for a very long period of time. CP’s ability to continue to grow its cash flows meaningfully overtime due to a significant amount of pricing power and continued steady long-term economic growth has led to an absolute-compounder of a stock for long-term value-conscious investors.
Grain and timber will continue to be shipped in larger quantities over time, and as we saw with this pandemic, volumes have not slowed to any significant degree, highlighting CP’s robust operations and how safe the company’s revenues continue to be.
CP’s excellent efficiency standard and operational excellence across a number of key metrics can be attributed in large part to former CEO Hunter Harrison who is widely regarded a perhaps the best CEO the industry has ever seen.
The value this company continues to create for long-term shareholders is unlikely to abate any time soon, so for those with sufficiently long investing time horizon, I’d suggest investigating CP closer.
Invest wisely, my friends.
