Monday, January 28, 2013

Trains and targets

Today I received a 14 $ dividend from Canadian Pacific, my only railway company.

Since Bill Ackman and Hunter Harrison took control of CP this position has more than doubled its price. I bought the shares at 46$, 52 $ and 65 $ for an average price of 58 $.

Unfortunately for me, I sold more than half of my stocks at around 75 $. I was estimating the stock overpriced. Now it's pointing at 113 $ and it's a bit upsetting (but still very much overpriced). 

CP has been doing better -- but not that better. See, the price of the stock at the moment is actually trading according to multiple cash flow estimates for 2016! It's basically trading at the same ratio of it's CN competitor -- but, unlike CN, on the basis of profits to come.

The moral of the story : I keep my modest position in CP for now. But I will watch it closely, and keep a closer watch on its rival, Canadian National (CN), who's been doing everything better than CP for years now.

I like trains. I think its a noble way of transportation for goods. Furthermore, I think it's the way of the future. So I intend to increase my position when the market will come down a little bit.

I have other stocks in my target. I want to have more defensive positions such as Alimentation Couche-Tard (ATD.B)which operates a network of convenience stores, many of which include motor fuel dispensing, mostly located in Canada, but also in 42 American states. Their dividend policy is weak, but it's a fast growing company. 

I also want to get my hand on a Telecommunication company. I used to have Rogers but I sold it (stupid move; I got scared by Mr. Market -- a bad move I won't make again). I think BCE is doing quite well; they have an aggressive dividend policy which is attractive. But it's quite expensive at the moment.

I am not making a move just yet. But when I do, it will be a big chunk. I just don't know of what yet!

Have you targeted any value stocks ?


  1. I have 100 shares of both NSC and CSX. I won't be looking to add another railroad at this time but CP does look like a good company.

    My value DG pick right now is INTC. They are currently my largest holding at 500 shares.

    I would like to get more Canadian and international exposure. ATD looks interesting but I probably wouldn't be interested at a yield of only .6%. BCE has a much higher yield and is worth looking into, thanks for pointing it out.

  2. Hello AAI!

    ATD.B has a yield much lower than 6 %. But it's bound to grow. They are very aggressive -- and have bought some companies around the world. If you are looking mainly at dividends, BCE is your stock. It's probably the stock most owned in Canadian Portfolios. The company is strong and well established. Safe bet. It's just a tad expensive at the moment.

    I will look into NSC and CSX. Thanks for mentioning those train stocks. Take care.


Thanks a lot for your comment.