When it comes to investing in the stock market, it’s all about longevity. If you can manage to stay in the market for as long as possible, without so much as touching your investments, you’re sure to come out in the black.
That is, as long as you’ve made smart investments.
These are the investments that can take your portfolio from good to great. The stocks that provide you with long-term revenue because they’re household names practically everyone knows. Whether they invest or not.
Yet of all the companies out there, this is the one I’d want to buy more of.
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Canadian Pacific Railway
I’ve always had a huge interest in history, and if I’ve learned one thing from it, it’s that those in shipping and receiving will always be a necessity. And not just any necessity, but a lucrative one. For this reason alone I could consider Canadian Pacific Kansas City (TSX:CP) a great buy.
However, as you’ll note, there’s an extra name on their you might not recognize. Kansas City Southern was purchased by Canadian Pacific Railway earlier this year, in a multi-year battle between the company and fellow duopoly railway Canadian National Railway.
CP stock won out, and has already seen its share price increase as the news became a certainty. And yet, while the company is now the proud owner of Kansas City Southern, it has had hardly any time to integrate the company. Which means there is far more revenue to come.
Outlook looking great
During the company’s most recent earnings report, CP stock focused on how it will deliver results from the recent merger. Its second quarter saw revenue of $3.2 billion, with diluted earnings per share at $1.42. Its operating ratio increased to 70.3% from 60.6% the last year, yet there were still some issues due to the ongoing consolidation of Kansas City Southern.
“Despite the challenging results, we still expect to deliver mid-single-digit core adjusted combined diluted EPS1 growth in 2023,” CEO Keith Creel said. “The long-term growth opportunities for this franchise are unique and undeniable. With our CPKC advantage, we are extending our reach for our customers, introducing new service offerings to the marketplace and creating new competition in North American supply chains.”
The company now expects diluted earnings per share to grow by mid-single-digits in 2023. The results could have been better, said analysts, but more should come as the company fully integrates the merger.
An outperformer
So far in 2023 alone, shares of CP stock have risen about 6%, hovering around the three-digit range for the last several months. Yet analysts believe the stock should outperform in the next year, even with weaker second-quarter results.
Management remained steadfast on their guidance for the second half of 2023. This guidance gives the sign that management is bullish about future results, and indeed could mean more contracts are on the way. This includes contracts with companies like Ballard Power, with CP stock ordering fuel cell engines yet again most recently.
So while CP stock has yo-yoed a fair bit in 2023, it’s a long-term stock anyone should consider. It’s now the only railway that runs throughout North America. The transnational railway has not even started to see the cash flow come in from its recent merger. All this tells me there is more to come, and I’ll be buying before then.
