The report for CN Rail is updated and rated (lower) Buy at $124.50. I have consistently said that CN is a great company given its duopoly position with CP Rail and the rails’ cost advantage over trucking and CN’s excellent history. But it usually tends to trade at a high P/E that makes it expensive. Such is the case now. I’d rather buy it on a dip than at this price. But selling it even when it looks expensive has consistently turned out to be a bad idea (well, depending where the proceeds were reinvested). Buying it, even when it seemed expensive has worked out well over time. I hold a small position.
CN rail is up 1,440% since I first added it to this web site back on August 27, 199 rated only “Speculative Weak Buy” at that time. It is also up 370% since I rated it in the Strong Buy category on January 25, 2007 when it exhibited one of its rare periods of actually looking cheap in comparison to earnings.
Back in the late 1990’s I had a friend who was quite senior at CN and he had many stock options and had made large gains. But he was eyeing maybe selling some of the shares since “it can’t go up forever”. Actually, CN shares might beg to differ given that they have in fact risen fairly steadily in the 23 years since the Initial Public Offering in late 1996. And the shares will almost surely be higher still in another 10 and 20 years. Sure, the shares have had their set backs especially when the whole market was down. And those declines would have been painful at the time. But looking back the declines were always temporary and relatively short-lived. Of course living through a year waiting for a recovery feels like an eternity at the time. But looking back it seems a mere flash of time.