cp rail

When your choose investments from the Resources sector, it’s a mistake to zero in on any one commodity, such as oil. Far better to give yourself exposure to several different commodities. Diversification within the sector cuts your risk without hurting your profit potential. In addition, remember that you can profit from the ongoing Resources boom by investing in companies that sell to businesses in the sector. Here are five top buys for exposure to the boom in Resources....

CANADIAN PACIFIC RAILWAY LTD. $48 (Toronto symbol CP; SI Rating: Above average) transports freight such as grain, coal, and industrial products over a 14,000-mile rail network in Canada and the United States. Alliances with other rail companies extend CP’s operations to Mexico. In the three months ended September 30, 2005, CP earned $1.27 a share (total $204 million), up 14.4% from $1.11 a share ($177 million) a year earlier. If you exclude several unusual items, per-share profit rose 29.2%, to $0.84 from $0.65. Higher freight rates and the expansion of CP’s rail network in Western Canada offset higher fuel and labour costs. Consequently, CP’s operating ratio fell to 77.4% from 77.9%. Revenue rose 11.1%, to $1.1 billion from $989.7 million. CP rose to $52 in December 2005. It moved down after Fording Canadian Coal Trust cut its 2006 production estimate. Fording, CP’s biggest customer, accounts for about 15% of its total revenue. However, this will cut CP’s 2006 profits by just $0.10 a share, as rising volumes for grain and industrial goods should offset lower coal shipments....

Canada’s top two railway stocks moved up sharply in 2005, as strong volume growth helped them overcome higher fuel costs. Lower production of coal and other commodities could cut into their revenue in 2006, but the payoff from recent investments in new locomotives and tracks should help their profits grow. We see Canada’s railways as portfolio cornerstones and we feel all Canadian investors should own a least one railway stock. CANADIAN NATIONAL RAILWAY CO. $92 (Toronto symbol CNR; SI Rating: Average) is Canada’s largest railway, with 19,300 miles of track in Canada and the United States. Goods shipped include forest products, petroleum and chemicals, and grain and fertilizers. In the third quarter of 2005, CN earned $1.47 a share (total $411 million), up 23.5% from $1.19 a share ($346 million) a year earlier. Most of the gain came from higher freight rates to offset rising fuel costs. Revenue rose 5.9%, to $1.8 billion from $1.7 billion....

When Canadian Pacific broke itself up into five separate companies this year, it gave investors an opportunity to fine-tune their investments. PANCANADIAN ENERGY $40 (Toronto symbol PCE; SI Rating: Average), formerly PanCanadian Petroleum, was already one of our favourites. We also like these four new companies. But some are better choices for your portfolio than others. You need to consider their SI Ratings (they range from Above-average to Extra risk) and sector (Fording belongs in Resources; the others are in Manufacturing & Industry.) You also need to consider your other holdings, to avoid unwanted concentration in any one business. CANADIAN PACIFIC RAILWAY LTD. $31 (Toronto symbol CP; SI Rating: Above average) operates a 14,000-mile railroad network that connects the main business centres of Canada and the U.S. Midwest and Northeast. Alliances with other railroads extend its reach to Mexico....