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Canadian Pacific Is Our Top Rail Pick Today

Although not a screaming bargain, CP is trading at a discount to its peers today and is less exposed to the specter of declining coal volumes.

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Keith Schoonmaker: Railroad profitability continues to improve, but volume growth is hard to come by, so we think every freight commodity deserves careful consideration, including coal.

Coal is particularly meaningful to the large U.S. rails and constituted 32% of revenue at CSX as recently as 2011. However, we believe coal remains a decreasing annuity for U.S. railroads.

Keith Schoonmaker does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.