Canadian National Railway April 29, 2018

Further to yesterday’s update of CN Rail, I have made a few minor edits to the report emphasize that a new risk in 2018 is the state of NAFTA negotiations given that one third of its traffic crosses the border. I also added a few details about which freight categories are growing and which are not as of Q1 2018.

Given my overall rating of (lower) Buy and given the NAFTA risk a logical strategy might be to buy a small position and look to add to it on dips. Any bad news related to NAFTA is likely to prove temporary in the long term.

I have mentioned before that CN has been a prodigious creator of wealth for investors over the years. It was first added to this site at $8.08 (adjusted for stock splits) back in August 1999. It initially rated only a Speculative Weak Buy. Now the stock is over $100. Over the years since then it has sometimes been rated only a Weak Buy but more often was rated a Buy and occasionally a Strong Buy and was rarely rated in the Sell category.

CN’s IPO price in late 1995 was $2.25. Today its annual earnings per share are more than twice that amount and its annual dividend at $1.82 is getting close to its original share issue price. Those who bought relatively early (and/or steadily over the years) and held on have done very well indeed. That includes its largest share holder one Bill Gates who has made billions. Several long-term Board members have made in excess of $10 million. These returns are in the past but it illustrates what can happen simply by owning and hanging onto highly profitable companies.