cn rail

AGRIUM INC., $115.36, Toronto symbol AGU, jumped 8% this week after the company increased its earnings forecast for the fourth quarter of 2012. Higher prices for grains and other crops are prompting farmers to apply more fertilizer. As a result, the company now expects to report fourth quarter earnings of slightly more than $2.00 a share (all amounts except share price in U.S. dollars). That’s well above its earlier forecast of $1.50 to $1.90 a share. Activist investment firm Jana Partners LLC continues to pressure Agrium to spin off its retail business as a separate company. Jana owns 6% of Agrium’s shares....

PLEASE NOTE: Next week, Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets, will reveal its #1 pick for 2013. SHAWCOR LTD., $40.88, Toronto symbol SCL.A, plans to convert its class A subordinate voting (one vote per share) and class B multiple voting (10 votes per share) shares into a single class of common shares (one vote per share). The company makes sealants and coatings that keep oil and gas pipelines from rusting. It also manufactures industrial products, such as electrical wire and protective sheaths....

The Howard Hughes Corp., $73.50, symbol HHC on New York (Shares outstanding: 37.9 million; Market cap: $2.8 billion; www.howardhughes.com), owns 34 commercial, residential and mixed-use properties in 18 U.S. states. General Growth Properties (symbol GGP on New York), a real estate investment trust (REIT) that went bankrupt during the financial crisis, handed out shares of Howard Hughes as part of its restructuring in 2010. The assets held by Howard Hughes required development and considerable funding. That made them a poor fit with a U.S. REIT, which must pay out 90% of its operating profit as a dividend. Prominent U.S. investor Bill Ackman is the chairman of Howard Hughes. He also owns about 10% of the company through his Pershing Square Capital Management firm. (Incidentally, Pershing Square also owns 14.2% of CP Rail and recently succeeded in replacing seven of CP’s 16 directors with its own nominees. It also appointed Hunter Harrison, the successful former CEO of CN Rail, as CP’s chief executive)....

CANADIAN NATIONAL RAILWAY CO. $86 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 431.5 million; Market cap: $37.1 billion; Price-to-sales ratio: 3.7; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.cn.ca) will repurchase up to 5.8 million of its shares from a private seller at a discount to the market price....

MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 140.0 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is acquiring Puratone Corporation, a private company that raises over 500,000 hogs a year at 50 barns in Manitoba. The takeover will give Maple Leaf control of 30% of the hogs used by its processing facility in Brandon, Manitoba.The company will pay $42 million for Puratone when the deal closes in the next few weeks. To put that in context, Maple Leaf earned $30.2 million, or $0.21 a share, in the three months ended September 30, 2012. That’s down 24.5% from $39.9 million, or $0.28 a share, a year earlier....

CANADIAN NATIONAL RAILWAY CO. $87 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 434.8 million; Market cap: $37.8 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.cn.ca) reported that its earnings rose 17.3% in the three months ended June 30, 2012, to $631 million from $538 million a year earlier. Earnings per share rose 22.0%, to $1.44 from $1.18, on fewer shares outstanding. If you exclude one-time items, such as gains on sales of rail lines, earnings per share rose 19.0%, to $1.50 from $1.26.

Revenue rose 12.5% to $2.5 billion from $2.3 billion. CN saw higher shipments of metals and minerals, coal, intermodal (containers that can be shipped by rail, ship or truck), petroleum and chemicals, and automotive and forest products. That offset lower shipments of grain and fertilizer.

CN’s operating ratio improved to 66.2% from 69.0% a year earlier. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.)

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CANADIAN PACIFIC RAILWAY LTD., $91.80, Toronto symbol CP, rose 4% this week after it reported better-than-expected quarterly earnings. That’s because the company is starting to benefit from a major plan to improve its efficiency with new locomotives, upgraded tracks and software that optimizes train loads and speeds. In the three months ended September 30, 2012, CP’s earnings rose 19.8%, to $224 million, or $1.30 a share. That easily beat the consensus estimate of $1.23. A year earlier, the company earned $187 million, or $1.10 a share. Revenue rose 8.2%, to $1.45 billion from $1.34 billion. The company saw revenue gains from shipping automotive products (up 31.3%), consumer and industrial products (up 23.7%), coal (up 9.5%), intermodal (up 7.4%) and grain (up 2.1%). Revenue from fertilizer shipments fell 19.0%, while forest products revenue declined 3.9%....

TELUS CORP., Toronto symbols T $62.71 and T.A $61.52, has paid an undisclosed sum for KinLogix. This Quebec-based private company makes software that lets medical professionals store patient records on remote server computers. KinLogix already serves over 200 clinics and accounts for 36% of Quebec’s electronic medical records market. Telus’s health care-related operations are much smaller than its main wireless and regular telephone divisions. However, demand for reliable electronic record storage is growing steadily. Telus’s strong reputation should help KinLogix attract more clients....

Canadian Pacific Railway has gained 22% since the start of 2012, while Canadian National Railway is up 9%. Even so, both trade at reasonable multiples to their earnings. Due to their importance to the Canadian economy, all investors should own at least one railway. We prefer CP for new buying. CANADIAN NATIONAL RAILWAY CO. $87 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 434.8 million; Market cap: $37.8 billion; Price-to-sales ratio: 3.8; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.cn.ca) reported that its earnings rose 17.3% in the three months ended June 30, 2012, to $631 million from $538 million a year earlier. Earnings per share rose 22.0%, to $1.44 from $1.18, on fewer shares outstanding. If you exclude one-time items, such as gains on sales of rail lines, earnings per share rose 19.0%, to $1.50 from $1.26. Revenue rose 12.5% to $2.5 billion from $2.3 billion. CN saw higher shipments of metals and minerals, coal, intermodal (containers that can be shipped by rail, ship or truck), petroleum and chemicals, and automotive and forest products. That offset lower shipments of grain and fertilizer....

AGRIUM INC., $100.74, Toronto symbol AGU, is buying back up to 9.5 million, or 6%, of its 158.0 million outstanding common shares through a Dutch auction process. It will spend a total of $900 million on these repurchases. The company makes fertilizers from natural gas. It then sells them, along with other agricultural and industrial goods, through its more than 1,200 stores in North America, South America and Australia. Under the Dutch auction buyback plan, shareholders who want to sell their Agrium shares must offer them for between $95.00 and $107.00 by October 19, 2012. The final price will be the lowest amount within that range at which Agrium can buy $900 million of its shares. The company will then pay that price for all shares tendered at or below it. If you tender at a higher price, Agrium will return your shares. The transactions are...