Canadian National Railway Company CNI has been on a winning streak over the past three months, and there’s reason to believe the momentum will continue. If you haven’t yet taken advantage of the stock’s upward trajectory, now may be the time to consider adding it to your investment portfolio.
Let’s delve into the compelling factors that make this stock an attractive proposition for investors.
A Strong Performer
A quick look at the company’s price trend reveals that its shares have outperformed the industry, with a solid 15.2% rise in the past three months compared to the industry’s 13.3% growth.
Favorable Rank: Canadian National currently holds a Zacks Rank #2 (Buy). According to our research, stocks with a Zacks Rank of #1 (Strong Buy) or 2 tend to offer appealing investment opportunities.
Positive Estimate Revisions: Over the past 60 days, five estimates for 2023 have moved upwards, reflecting analysts’ confidence in the stock. Additionally, the Zacks Consensus Estimate for 2023 earnings has seen a marginal increase during this period.
Promising Growth Prospects: The Zacks Consensus Estimate for 2024 earnings stands at $5.92 per share, signaling an 11% year-over-year growth. The company’s long-term expected earnings per share (EPS) growth rate is at a respectable 7.23%.
Driving Forces: The company’s ongoing commitment to rewarding its shareholders is noteworthy. In January 2023, CNI’s board approved an 8% dividend hike, marking its 27th consecutive annual dividend increase.
CNI’s ability to generate free cash flow underpins these shareholder-friendly initiatives. In 2022, the company generated free cash flow of C$4,259 million, compared to C$3,296 million in 2021. In Q2 2023, Canadian National generated a free cash flow of C$1,100 million, a significant climb from the prior year’s C$997 million. Additionally, it reported a free cash flow of C$581 million in Q3 2023, despite a decline from C$1,356 million a year ago.
Operating expenses during Q3 2023 fell by 4% year over year to C$2,470 million, attributed to lower fuel prices. Favorable impacts were seen from freight rate increases, a favorable translation impact resulting from a weaker Canadian dollar, and higher export volumes of Canadian grain.
Other Standout Picks
For investors eyeing the Transportation industry, other top-ranked stocks like Ryanair Holdings RYAAY and SkyWest SKYW, both currently holding a Zacks Rank #1 (Strong Buy), warrant consideration as well. Detailed analysis of today’s top Zacks #1 Rank stocks can be found right here.
RYAAY is benefiting from a buoyant air-traffic environment post Covid. Traffic surged by 11% to 105.4 million during the first half of fiscal 2024, pushing the company’s profit after tax to €2.18 billion, marking a 59% year-over-year increase. Ryanair expects fiscal 2024 traffic to reach 183.5 million.
SKYW’s fleet modernization initiatives have been commendable. Moreover, its efforts to reward its shareholders bode well, with a 3.5% increase in the Zacks Consensus Estimate for 2024 earnings over the past 60 days.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2023. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Canadian National Railway Company (CNI) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
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