CANADIAN NATIONAL RAILWAY CO. $60 - symbol CNR

CANADIAN NATIONAL RAILWAY CO. $60 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 836.0 million; Market cap: $50.2 billion; Priceto- sales ratio: 4.8; Dividend yield: 1.4%; TSINetwork Rating: Above Average; www.cn.ca) expects that its operating ratio crept up to around 63% in 2013 from 62.9% in 2012. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.)

CN continues to buy fuelefficient locomotives and run longer trains. These moves should cut its operating ratio to around 60% over the next three years.

CN is also benefiting from a lack of pipeline capacity, which is prompting oil producers to ship by rail. Higher demand for automotive equipment and building materials should also increase its shipping volumes. As a result, CN’s earnings should rise 13.2%, from a projected $3.10 a share in 2013 to $3.51 in 2014. The stock trades at a reasonable 17.1 times the 2014 estimate.

CN Rail is a buy.

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