Q: I bought both of the Canadian Rails in a TFSA 1 1/2-2 years back and they haven't done much. I assume much of the underperformance is related to the tariff issue, but historically if i'm correct, have been very good investments over multi year periods.
With the increase in diesel prices do the rails stand to gain traction brought about by cargo being pushed from truck to rail and how do you perceive the relevant cost efficiencies of rail vs truck assuming both are likely powered by diesel?
Do you see any reason for a breakout of these stocks that have traded in a range for some time?
With the increase in diesel prices do the rails stand to gain traction brought about by cargo being pushed from truck to rail and how do you perceive the relevant cost efficiencies of rail vs truck assuming both are likely powered by diesel?
Do you see any reason for a breakout of these stocks that have traded in a range for some time?
5i Research Answer:
We wouldn't expect a whole lot from them in the near-term, given the general market and increasing concerns over an economic slowdown with the help of higher oil prices.
However, higher oil prices does help at the margins but we wouldn't really expect it to be a material impact in the short term either. Performance has been muted over the last year but as stable operators trading in the high teens, we wouldn't be too concerned about them with a long-term outlook.