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Article Excerpt

CANADIAN PACIFIC RAILWAY LTD., $281, is still our #1 Conservative Buy for 2019. The railway stock (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 139.8 million; Market cap: $39.3 billion; Price-to-sales ratio: 5.1; Dividend yield: 1.2%; TSINetwork Rating: Above Average; www.cpr.ca) has moved down from its recent peak of $323.71 in July 2019. That’s mainly because the company warned that poor weather conditions in Western Canada—a dry spring followed by a wet summer—will cut grain shipments by about 11% in the third quarter of 2019. Grain supplies about a third of CP’s revenue. The U.S.-China tariff war could also slow global trade volumes and hurt the company’s freight volumes. However, CP’s strong efficiency should bolster its profits despite that uncertainty. The stock trades at 17.1 times the projected 2019 earnings of $16.45 a share. Earnings are primed to go higher in 2020, reaching $18.60. The stock trades at a more reasonable 15.1 times that estimate. estimate. …