CP

Norfolk Southern’s Environmental and Safety Troubles Plague Stock

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Image: Norfolk Southern’s environmental troubles have sent its stock back to pre-pandemic levels. The company is yet another example of why companies cannot take for granted how their operations can negatively impact the environment. Image Source: TradingView By Brian Nelson, CFA Environment, Social, and Governance (ESG) dynamics have always commanded a large share of executives’ mindshare, but ESG investing has taken on a more prominent role in investing given the preference of many investors to hold stock in companies that share their personal values. But this isn’t lip service. Entities that aren’t taking the highest care when it comes to protecting the environment and ensuring employee/consumer safety can face a whirlwind of negative publicity and huge backlash that can have … Read more

Two Railroad Operators to Join Forces, Creating the First Fully Integrated Canada-US-Mexico Railroad Network

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Image Source: Canadian Pacific Railway Ltd, Kansas City Southern – March 2021 Acquisition Presentation By Callum Turcan On March 21, Canadian Pacific Railway Ltd (CP) announced it was acquiring Kansas City Southern (KSU) through a cash-and-stock deal worth ~$29.0 billion by enterprise value (factoring in assumed debt). The combination will create the first fully integrated Canada-US-Mexico railroad operator with ~$780 million in annualized synergies expected within three years of the deal closing. Once this two-part transaction is complete, the new entity will have a US Class 1 railroad network that spans ~20,000 miles with ~20,000 employees supporting its operations. The pro forma company will be renamed Canadian Pacific Kansas City (‘CPKC’). According to the acquisition press release: Calgary will be … Read more

Dividend Increases/Decreases for the Week Ending July 24

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Below we provide a list of firms that raised their dividends during the week ending July 24. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week BBX Capital Corporation (BBX): now $1.19 per share special dividend, was $0.0625. Bluegreen Vacations Corporation (BXG): now $1.19 per share special dividend, was $0.13. Bright Scholar Education (BEDU): now $0.12/ADS annual dividend, was $0.10. Bryn Mawr Bank (BMTC): now $0.27 per share quarterly dividend, was $0.26. Camping World (CWH): now $0.09 per share quarterly dividend, was $0.08. Canadian Pacific Railway (CP): now CAD 0.95 per share … Read more

Stocks in the News: Kinder Morgan, Union Pacific, Colgate-Palmolive

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Let’s cover the quarterly reports from a few industry bellwethers. By Brian Nelson, CFA Kinder Morgan (KMI) Plans for Dividend Hikes Kinder Morgan appears to be back on track, something that it set the stage for in early 2016 when Barron’s wrote about Valuentum’s take, “Is Kinder Morgan on the Road to Recovery (January 2016).” The pipeline operator continues to trade near our fair value estimate of $20, so it’s hard to make the case that there is a tremendous valuation opportunity in shares, though its prospects for a return to dividend growth have improved. On July 19, Kinder Morgan announced that it expects to raise its dividend by 60% in 2018 and advance the payout at a 25% yearly … Read more

Calendar Fourth Quarter Earnings Roundup: IBM, GE, PG, UNP

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Image Source: texasfeel Let’s get our thoughts on calendar fourth-quarter performance from a few giants in their respective industries. By Kris Rosemann and Brian Nelson, CFA International Business Machines IBM’s (IBM) stock is now back above the $170 per-share mark after falling below $120 per share just a little over a year ago. Five-year performance of the equity, however, still remains terrible, with shares of IBM languishing around the price they were changing hands at the beginning of 2012. Warren Buffett’s association with the stock has a lot of investors excited, but we think the Oracle of Omaha may be a bit too optimistic on this one. Year-over-year revenue at IBM has been under considerable pressure for some time, and … Read more

Tough Times for Rails

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Key Takeaways: The North American railroad industry is oligopolistic in nature, and we love the barriers to entry and pricing strength that come with it. North American railroad operators have been hit by volume declines across a wide range of end markets. Currency movements and global economic concerns aren’t helping matters. Union Pacific remains our choice for exposure to the space. Though others present interesting opportunities as well, we think the firm’s operating ratio has the most upside from current levels in addition to it having some attractive market positioning. “…we’re not thrilled by the performance of Union Pacific since it was added to the Best Ideas Newsletter portfolio, but the railroad industry offers such a strong fundamental backdrop that … Read more

Dividend Increases/Decreases for the Week Ending April 22

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Below we provide a list of firms that raised/lowered their dividends during the week ending April 22. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week American Water Works (AWK): now $0.375 per share quarterly dividend, was $0.34. Aspen Insurance Holdings (AHL): now $0.22 per share quarterly dividend, was $0.21. Canadian Pacific Railway (CP): now C$0.50 per share quarterly dividend, was C$0.35. Celanese (CE): now $0.36 per share quarterly dividend, was $0.30.           Charles Schwab (SCHW): now $0.07 per share quarterly dividend, was $0.06. Citizens Financial (CFG): now $0.12 per share quarterly dividend, … Read more

Railroad Merger Talks

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Canadian Pacific (CP) is back on the hunt for consolidation. After regulators shot down a proposed deal for CSX (CSX) last year, the firm is reportedly in preliminary talks with Norfolk Southern (NSC) concerning a merger that could be worth more than $24 billion. The fact that there are so few railroad operators in the US suggests that a deal will be very difficult to get past regulators, and if a deal does in fact get done, it will likely be the last of its size in the industry. The two companies have complimentary cargo markets and little geographical overlap, in our birds’ eye view of their respective route networks. Norfolk Southern generates 22% of its revenue in intermodal shipments, … Read more

The Correction: No Panic Selling on Columbus Day

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The past three years have been an anomaly, in our view, with the broader equity markets practically going straight up. For those new to the markets and stock investing, in general, this simply is not how the equity markets behave. Many stock pickers have even become frustrated as a result of the market’s steady-eddy advance with negligible meaningful swings during most of the past 36 months. The market, as measured by the SPDR S&P 500 (SPY), hasn’t had a 10% drop in nearly 1,100 days. As of last Friday’s close, we’re a mere 5.6% from the intra-day high on September 19. During the past three years, the market has made everyone look like a genius, and frankly it has been … Read more