(The following story by Curtis Rush appeared on the Toronto Star website on February 3.)
TORONTO — CN is back on track and at least one analyst likes the growth prospects at the railway company.
Canadian National Railway Co. is a buy, according to a U.S. analyst.
Better grain harvests in Western Canada will give rise to better performance at CN, according to Kate Warne, senior market strategist at Edward Jones in St. Louis.
She believes that the big-league transportation concern will remain buoyant because of better grain harvests.
Even though CN’s shares are at a 52-week high, they will continue to rise, she believes. The shares closed at $80.23 Monday.
CN will also continue to benefit from North America’s overall economic rebound.
CN is positioned to gain a larger share of the haulage of finished steel following its $500 million purchase of Great Lakes Transportation LLC in October.
Besides a fleet of Great Lakes vessels, the GLT purchase gives CN one switching railway as well as two short lines that primarily care coal and iron ore, Warne says.
Having bought B.C. Rail, Canadian National is on track to grab a larger share of the transportation of B.C.’s forest products, according to the analyst.
Another plus is CN’s access to Mexico via its Chicago to New Orleans main line.
Warne said that CN is a buy for growth but not income given its low dividend yield. However, at 13 times earnings, CN is attractively valued, Warne says.
For the three months ended Sept. 30, CN’s net income rose 9.7 per cent to $294 million from $268 million for the similar period in 2002.