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Why Canadian National (CNI) Could be a Winning Investment Right Now

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Canadian National Railway Company CNI has been on a winning streak over the past three months, and thereโ€™s reason to believe the momentum will continue. If you havenโ€™t yet taken advantage of the stockโ€™s upward trajectory, now may be the time to consider adding it to your investment portfolio.

Letโ€™s delve into the compelling factors that make this stock an attractive proposition for investors.

A Strong Performer

A quick look at the companyโ€™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 industryโ€™s 13.3% growth.

Zacks Investment Research

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 analystsโ€™ 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 companyโ€™s long-term expected earnings per share (EPS) growth rate is at a respectable 7.23%.

Driving Forces: The companyโ€™s ongoing commitment to rewarding its shareholders is noteworthy. In January 2023, CNIโ€™s board approved an 8% dividend hike, marking its 27th consecutive annual dividend increase.

CNIโ€™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 yearโ€™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 todayโ€™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 companyโ€™s profit after tax to โ‚ฌ2.18 billion, marking a 59% year-over-year increase. Ryanair expects fiscal 2024 traffic to reach 183.5 million.

SKYWโ€™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%.

Today, See These 5 Potential Home Runs >>

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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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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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