June 19, 2016

On Friday, the S&P 500 was down 0.3% while Toronto was up 0.1%.

The Bombardier Series 3 preferred share was up 4.4% to $15.25. This is a very weak company. Still, the preferred share dividend is likely to continue to be paid and governments seem unlikely to let the company go under. These shares are not without risk but should still rise once the pending government investments are finalised.

Our report for Canadian National Railway Company is updated and rated (lower) Buy. Carloadings have been declining and the company appears to be forecasting an earnings decline of an average 5% in the remaining three quarters of 2016. The CEO is resigning due to health reasons and will be replaced by the CFO. I do not view that as a concern as the management approach is unlikely to change. CN has been extremely well managed and has been an excellent investment since its IPO about 20 years ago. Carloadings do vary with the economy and will recover.


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