cp rail

RIOCAN REAL ESTATE INVESTMENTTRUST $27.80 (Toronto symbol REI.UN; Unitsoutstanding: 297.3 million; Market cap: $8.3 billion;TSINetwork Rating: Average; Dividend yield: 5.1%;www.riocan.com) is raising its monthly distributionby 2.2% with the January 2013 payment, to $0.1175a unit from $0.115.

The new annual rate of $1.41 yields 5.1%....

CANADIAN PACIFIC RAILWAY LTD. $97 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 173.0 million; Market cap: $16.8 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.4%; TSINetwork Rating: Above Average; www.cpr.ca) plans to cut 25% of its workforce as part of a major restructuring plan aimed at improving its efficiency. CP is also increasing the length and speed of its trains. The plan should cut CP’s operating ratio from 74.1% in the third quarter of 2012 to 65% in 2016. (Operating ratio is calculated by dividing regular operating costs by revenue—the lower, the better.)

In addition, CP has suspended its plan to build new rail lines that would have served coal mines in Montana and Wyoming. That’s because power plants are switching to cheaper natural gas, which has hurt demand for coal. As a result, CP will take a $180-million charge. That’s equal to 80% of the $224 million, or $1.30 a share, that it earned in the third quarter.

CP Rail was our #1 buy for 2012. It’s still a buy.

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CANADIAN PACIFIC RAILWAY LTD. $97.70, Toronto symbol CP, rose 5% this week after the company announced a major restructuring plan aimed at improving its efficiency. CP’s strategy includes cutting 25% of its workforce, making its trains longer and faster, and closing some terminals. CP didn’t say how much these moves would cost. However, the restructuring should help cut its operating ratio from 74.1% to around 65% in 2016. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.) In addition, CP has suspended its plan to build new rail lines that would have served coal mines in the Powder River Basin in Montana and Wyoming. The company received an exclusive option to build these lines as part of a 2007 acquisition. However, power plants are switching to natural gas, which has hurt demand for coal. As a result, CP will write down this option and related assets by $180 million. That’s equal to 80% of the $224 million, or $1.30 a share, that it earned in the third quarter of 2012....

CANADIAN PACIFIC RAILWAY LTD. $97 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 173.0 million; Market cap: $16.8 billion; Price-to-sales ratio: 3.0; Dividend yield: 1.4%; TSINetwork Rating: Above Average; www.cpr.ca) plans to cut 25% of its workforce as part of a major restructuring plan aimed at improving its efficiency. CP is also increasing the length and speed of its trains. The plan should cut CP’s operating ratio from 74.1% in the third quarter of 2012 to 65% in 2016. (Operating ratio is calculated by dividing regular operating costs by revenue—the lower, the better.) In addition, CP has suspended its plan to build new rail lines that would have served coal mines in Montana and Wyoming. That’s because power plants are switching to cheaper natural gas, which has hurt demand for coal. As a result, CP will take a $180-million charge. That’s equal to 80% of the $224 million, or $1.30 a share, that it earned in the third quarter. CP Rail was our #1 buy for 2012. It’s still a buy....

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 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%....

CANADIAN PACIFIC RAILWAY $85.01 (Toronto symbol CP; Shares outstanding: 171.7 million; Market cap: $14.6 billion; TSINetwork Rating: Average; Dividend yield: 1.7%; www.cpr.ca) continues to make progress with its plan to improve its efficiency with new trains and streamlined schedules. The company has just launched its new transcontinental service for intermodal containers (which can be shipped by rail, ship or truck), which uses a more direct route with fewer stops. As a result, CP can now ship containers from Vancouver to Toronto in four days instead of five. Shipping to Chicago also takes four days, down from six. CP Rail is a buy....

CANADIAN PACIFIC RAILWAY LTD., $80.03, Toronto symbol CP, continues to make progress with its plan to improve its efficiency with new trains and streamlined schedules. This week, the company launched its new transcontinental service for intermodal containers (which can be shipped by rail, ship or truck). This new service uses a more direct route with fewer stops. As a result, CP can now ship containers from Vancouver to Toronto in four days instead of five. Shipping to Chicago also takes four days, down from six. CP is our #1 buy for 2012....

LOBLAW CO. $32.56 (Toronto symbol L; Shares outstanding: 281.4 million; Market cap: $9.2 billion; TSINetwork Rating: Above Average; Dividend yield: 2.6%; www.loblaw.ca) starting selling its popular Joe Fresh clothing and accessories in its supermarkets in 2006. It has also opened 12 stand-alone Joe Fresh stores in Canada and six in the U.S. Loblaw has formed a new partnership with J.C. Penney (New York symbol JCP). Under this deal, Loblaw will build Joe Fresh boutiques in 700 of Penney’s 1,100 U.S. department stores. (J.C. Penney is a recommendation of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.) These outlets should open in April 2013. Penney will also sell Joe Fresh products through its website. Loblaw is a buy....

The New York Stock Exchange defines a blue chip as stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good times and bad. The problem is that “reputation” plays a key role in the definition. Many companies acquire a blue-chip reputation by displaying the qualities that the definition suggests. Others get it through a strong public relations effort or by being in the right industry or business situation at the right time and place. Regardless of how it got there, this blue-chip label sticks with companies long after they quit living up to it....