mercredi 9 décembre 2015

Tchoo tchoo

I've always liked railroads. To me, they represent one of the best business that could exist: high barriers to entry, essential for the economy, very easy to understand... and I can't see how railroads could become obsolete.

In the past, I've owned some shares of Canadien National (CNR.TO). I liked the company and the great work of Hunter Harrisson. But the PE ratio eventually became too high VS ROE and EPS growth. So I sold my shares and went to buy some fucking shit.

Recently, I've took another look at railroads. Three of the best railroads (if not the three best) are close to their 52 weeks lowest price (the PE ratio is low too). In times like these, it may be a good time to buy something because the sector is not very popular. And it's a great sector. Not like that fucking oil and gas sector.

So, here's a quick look at three of the best railroad operators:

Canadien National (CNR.TO)

Forward PE: 16
ROE: 24
Annual EPS growth last 5 years: 14%
Share buyback: Yes
Debt: Medium
Dividend: 1,7%
I've read a couple of times that CNR was the best railroad operator in North America. I don't believe it's still the case, but this is nevertheless a great company that have been commited to shareholders for a long time.

Canadian Pacific (CP.TO)

Forward PE: 15
ROE: 27
Annual EPS growth last 5 years: 21%
Share buyback: Yes
Debt: Medium-High
Dividend: 0,8%
Canadian Pacific has never been as well managed as CNR until recently. Hunter Harrisson, former CEO of CNR didn't hesitate to betray his former company, jumping the fence to CP with the help of Bill Ackman, the guy who doesn't give a fuck about morality when it's time to make some money. The results are there. Take a look at Pershing Square results over time. It looks once again that this fucking christian morality still retains us to make money and have some pleasure in our fucking existence. Recently, CP tried to buy Norfolk Southern, an average american railroad operator. I believe a deal won't be easy. But it could be very positive for CP.

Union Pacific (UNP)

Forward PE: 13
ROE: 24
Annual EPS growth last 5 years: 25%
Share buyback: Yes
Debt: Medium
Dividend: 2,9%

Probably the best railroad company in America. The last results haven't been that great, but the company has done very well over time. It would probably be my first recommandation if anybody wanted to buy a railroad even if CP does better these days.

Whatever the fuck I'm saying, I've just bought some CP shares. I just need two sentences to do the opposite to what I've just said.

Anyway, 5 years from now, I'm pretty sure that anybody would do well with any of these three companies.

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