Wednesday, July 25, 2007


Still tracking B.C. Rail ...

It used to be that B.C. Rail was a public utility designed to serve the needs of passengers and freight along the heartland route through British Columbia.

In olden times, it suffered as much as the PacifiCats from its opponents who called it the "Please Go Easy" instead of the original Pacific Great Eastern railway.

Well, the suits eventually won and today B.C. Rail is an unrecognizable part of CN's numbers game. Here's the latest


Paul Delean,
CanWest News Service - July 25, 2007

MONTREAL -- Canada's fast-moving rail stocks lost a bit of steam Tuesday in the wake of unremarkable second-quarter earnings from both Canadian Pacific Railway Ltd. and Canadian National Railway Co.

CP was down 3.6 per cent to $83.60, while CN dropped 5.5 per cent to $57.03.

Still, both stocks show solid advances in 2007 and double-digit gains going back 12 months, and some analysts are convinced the setback is temporary. {Snip} ...

CP stock went from $77.05 to $89 last week and even with Tuesday's drop is trading above where it was a week ago. It's gained 32 per cent in the past year.

CN, which traded below $52 in January, got as high as $60.65 last week. {Snip} ...

But Matt Pugsley, in a research comment for the Bank Credit Analyst, said he expects railroads to underperform the broad market because "financing costs in this capital-intensive industry have increased at a time when revenue growth prospects still appear minimal."

He said the industry "remains exposed to the main sources of economic drag," and "the latest producer price report showed that rail pricing power continues to slide in absolute terms . . . The steady decline in the ability of the industry to raise selling prices is symptomatic of persistent weakness in overall rail car shipment growth." [What in blazes does that mean? - BC Mary.]

Canadian Pacific is sticking with revenue-growth projections of four to six per cent in 2007 and profit increases of nine to 12 per cent. CN has lowered its forecast earnings growth to five per cent from 10.

CP has outpaced CN significantly in stock appreciation over the past 12 months, which led some analysts to recommend taking profits on CP and switching to CN.

The entire dismal story is at:


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