Canadian National Railway Company (CNI): A Bull Case Theory

We came across a bullish thesis on Canadian National Railway Company (CNI) on Substack by Max Dividends. In this article, we will summarize the bulls’ thesis on CNI. Canadian National Railway Company (CNI)’s share was trading at $96.82 as of April 30^th. CNI’s trailing and forward P/E were 19.10 and 16.84 respectively according to Yahoo Finance.

A railway track winding through a rough landscape with a freight train in transit.

Canadian National Railway (CNI), one of North America’s top railroads, has seen its stock decline nearly 30% amid the ongoing U.S.-Canada tariff dispute. Despite this setback, CNI remains a high-quality, wide-moat business, with a crucial role in transporting essential goods like petroleum, chemicals, and grain across its 18,800 miles of track in Canada and the U.S. Founded in 1919 through the nationalization of struggling railroads, CNI has evolved into a highly efficient, profitable enterprise, privatized in 1995. While tariffs and recession fears could create short-term challenges, the company’s strong management has a proven track record of weathering economic volatility, evidenced by its 29 consecutive years of dividend increases. Currently, CNI offers its highest dividend yield ever outside the 2008 financial crisis, standing at 2.55%. Analysts project a steady 9.6% annual growth rate for CNI’s earnings in the long term, and the dividend is well-covered with a payout ratio of only 44%. Despite the stock’s recent sell-off, it appears to be more of a temporary concern than a reflection of fundamental issues, presenting an attractive buying opportunity for long-term investors. CNI’s financial strength and stable dividend make it a compelling option for those seeking both income and growth.

Canadian National Railway Company (CNI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held CNI at the end of the fourth quarter which was 42 in the previous quarter. While we acknowledge the risk and potential of CNI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CNI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.