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

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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.
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This note was uploaded on 11/13/2011 for the course CIVE 2*** taught by Professor - during the Spring '11 term at Carleton CA.

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