{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

6.1 - WOULD YOU BUY CP REASONS TO BUY 1 Canadian investors...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
WOULD YOU BUY CP? REASONS TO BUY 1. Canadian investors are generally over exposed to the heavy sector weights in the S&P/TSX Composite such as Financials (33%), Energy (30%) and Materials-Mining (16%) and under exposed to the other 7 sectors. 2. At current prices, CP Rail trades at a discount earnings multiple to the rail group with CP at less than 12x 2006 EPS and the sector at roughly 14x . CP trades at almost a 3 multiple point discount to CN Rail. In 2006, the street is expecting earnings growth of 17% for CP, the second highest in the group, and we believe the numbers could prove to be conservative. 3. While it is not a primary reason to buy CP, the company does represent a strategic asset and a takeover target . RISKS 1. The volatility risks involved in investing in common stocks generally 2. The freight transportation industry is highly competitive . CP faces intense competition for freight transportation in Canada and the U.S., including competition from other railways and trucking companies. 3. CP's freight volumes and revenues are sensitive to factors
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}