Q: I was looking to add to some of my steady, stable investments - including these two. Would you agree that the valuations are reasonable to purchase additional shares currently, or maybe recommend holding off on purchasing more of either/both of these, until the US tariff concern is better outlined - could this really depreciate the value of these railways?
5i Research Answer:
Neither stock never really gets to be 'cheap'. CP did get a little cheap following its huge purchase of KC, but now after outperforming is more expensive than CNR. There is concern on tariffs but we would see this as either overblown, or at least partially priced in. Onshoring and protectionist US policies can still be good for railways as more domestic production will need to be shipped. Both have significant US exposure already. We would be comfortable buying today and would lean towards CNR on its lower valuation. The stock is down about $8 since the election, despite continued-strong earnings growth projections.