Q: Recognizing that 5i Research does not perhaps put as much emphasis on technical analysis as opposed to fundamentals, perhaps you have an opinion anyway on log charting in particular.
I noticed that CNR - generally flat for the last 4-1/2 years, fell out of a long term log channel 2 years ago - a channel going back to its listing three decades ago. In fact, with this in mind, I've discovered that the present price is at a considerable distance from the bottom of that channel not seen since the GFC.
So do you see this as a great buying opportunity for CNR based on this observation? Or do you have an opinion in general on the future of railroads in the face of any potential long term disruption that I am unaware of (eg. AI-based) ?
I noticed that CNR - generally flat for the last 4-1/2 years, fell out of a long term log channel 2 years ago - a channel going back to its listing three decades ago. In fact, with this in mind, I've discovered that the present price is at a considerable distance from the bottom of that channel not seen since the GFC.
So do you see this as a great buying opportunity for CNR based on this observation? Or do you have an opinion in general on the future of railroads in the face of any potential long term disruption that I am unaware of (eg. AI-based) ?
5i Research Answer:
We use some charting, and have been partial to Point and Figure generally. Charts can be helpful in timing an exit and entry, but not our area of expertise, certainly. Log charting (percentage changes vs price) can make sense in trying to determine long term direction. The CNR chart looks good and its valuation multiples are below historical trends right now as well. We doubt there will be significant LT disruptions in the business. Autonomous trucks might displace some traffic, but for size shipping and costs the duopolistic Canadian industry is still a good advantage to CNR and CP.