CANADIAN PACIFIC RAILWAY LTD. $170

CANADIAN PACIFIC RAILWAY LTD. $170 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.2 million; Market cap: $25.7 billion; Price-to-sales ratio: 3.9; Dividend yield: 1.2%; TSINetwork Rating: Above Average; www.cpr.ca) ships freight over a 22,000-kilometre rail network between Montreal and Vancouver. It links to hubs in the U.S. Midwest and Northeast.

Due to fewer shipments of grain and potash, CP expects its revenue in the second quarter of 2016 to fall 12% from a year earlier. The company also expects its earnings per share in the quarter will decline to $2.00 from $2.45 a year earlier.

However, CP expects rising commodity prices should spur shipments in the second half of 2016. As well, it is boosting efficiency by speeding up trains and cutting the time they spend at terminals. In the first quarter of 2016, its operating ratio improved to 58.9% from 63.2% a year earlier.

CP expects to earn $11.11 a share in 2016. The stock trades at 15.3 times that forecast. The $2.00 dividend yields 1.2%.

CP Rail is a buy.

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