Railways Offer Great Value Plus Growth

Article Excerpt

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. The company is still the most efficient…

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