We recently published a list of 10 Best Canadian Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Canadian Pacific Kansas City Limited (NYSE:CP) stands against other best Canadian stocks to buy according to billionaires.

Against the backdrop of trade war concerns and retaliation against Trump’s tariff hikes on Canadian imports, investors are closely monitoring the impact on cross-border trade. The uncertainties threaten to disrupt economic growth and corporate earnings in both countries. Recently, Trump finalized a 25% hike on the import of goods from Canada and Mexico, causing the US and Canadian stocks to fall and sparking threats of a trade war. The tariffs are expected to affect more than $918 billion worth of US imports from Canada and Mexico. According to Reuters, the move could upend nearly $2.2 trillion in annual U.S. trade with its top three trading partners. Additionally, 20% tariffs against Chinese goods have doubled the levy on China from last month. In retaliation to the tariff hikes, Canadian Prime Minister Justin Trudeau has now announced a 25% tariff on C$30 billion (US$20.7 billion) worth of U.S. imports. BBC has reported that the US tariffs are likely to push up prices for consumers in the US and abroad soon.

Morningstar predicts that the US tariffs now in place indicate that the Bank of Canada may need to implement aggressive interest rate cuts to counter the economic fallout and stabilize the economy.  The BoC has been one of the most aggressive central banks in cutting rates. Earlier this year, the Bank trimmed its key policy rate by 25 basis points to 3% and scaled down the country’s economic growth outlook to 1.8% in 2025 from the 2.1% predicted in October in anticipation of the tariffs. In its Monetary Policy Report, the BoC has noted that the Canadian economy showed signs of resilience at the end of 2024, contributing to an increase in household spending and housing activity. While inflation has remained at 2% since August 2024, the uptick in economic growth was fueled by a rapid series of interest-rate cuts, which are now threatened by the uncertainties of trade relations.

For American investors, investing in Canadian stocks listed on U.S. stock exchanges offers the opportunity to diversify their portfolios with companies operating in a resilient economy. However, with the headline index for the Canadian equity market dropping  1.7% to close at 24,570 on March 4 and extending the previous session’s 1.5% decline to reach a seven-week low, investors should brace for continued uncertainty as markets adjust to the new trade dynamics. The best Canadian stocks took a hit, especially in sectors such as transportation and energy, calling for a reassessment of investing strategies. While there is no set formula to benefit from billionaire portfolios and stocks billionaires invest in, the UBS Billionaire Ambitions Report 2024 highlights some key themes of extensive diversification that can be beneficially incorporated into investment strategies for long-term resilience.

Our Methodology 

We analyzed Insider Monkey’s exclusive database of billionaire stock holdings to compile our list of best Canadian stocks to invest in according to billionaires. We selected the 10  best stocks to buy based on the highest number of billionaire investors, updated as of Q4 2024. For the stocks with the same number of billionaire holdings, we have used the total value of billionaire holdings as a secondary metric to rank the stocks. These billionaires are founders or managers of some of the world’s leading hedge funds and companies.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Canadian Pacific Kansas City Limited (NYSE:CP)

Number of Billionaires: 15

Canadian Pacific Kansas City Limited (NYSE:CP), operates a transcontinental freight railway network spanning approximately 20,000 miles across Canada, the United States, and Mexico. The extensive network positions CPKC as a pivotal player in North American trade.

Recently, Canadian Pacific Kansas City Limited (NYSE:CP) has made some strategic investments, such as the newly completed international railway bridge across the Rio Grande. The investments position the company to capitalize on growing trade opportunities across North America. CPKC has also received a go ahead from the Toronto Stock Exchange to buy back up to about 4% of its issued and outstanding shares, which is likely to bolster its shareholder value.

However, external factors like potential trade tariffs and labor disputes threaten to impact operations. Investors should monitor these developments closely, as they could influence CPKC’s performance in the coming months.

In their recent Earnings Report, Canadian Pacific Kansas City Limited (NYSE:CP) has reported a total revenue increase of 14.14% since last year and increased 6.47% since last quarter.

CPKC reported Q4 2024 earnings of 92 cents per share and the bottom line improved 5.8% on a year-over-year basis, aided by improved operational efficiency.

Canadian Pacific Kansas City Limited (NYSE:CP) reported operating revenues of $2.77 billion, though the top line and operating expenses declined on a year-over-year basis. The decline is attributed to synergies from cost savings and efficiencies from its merger with Kansas City Southern. The reported operating ratio improved 210 basis points to 59.7% from 61.8% in the prior year quarter, which is more desirable.

Overall, CP ranks 3rd on our list of best Canadian stocks to buy according to billionaires. While we acknowledge the potential for CP 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 time frame. If you are looking for an AI stock that is more promising than CP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

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