Q: I have positions in both CP and CNR and need to lessen my position in one of these railways. Which one would you choose to lighten up on and your reasoning. Thank You.
5i Research Answer:
At the current valuations, both actually do not look that expensive relative to other players in the industry and compared to their historical averages over the last few years. Although CP is trading at a premium valuation, the company has demonstrated a much more solid track record in terms of operational efficiency, CNR on the other hand is still an above-average operator in the rail industry compared to US peers. We think an equal trim across both would be a decent decision, but if we HAVE TO trim only one, we would trim CNR.