Railroads have been moving in the right direction in IBD's
ranking of 197 industries, and the top-rated rail stock
--Canadian National Railway (
) -- is worth considering if you're looking for both a dividend
and growth potential.
The Transportation-Rail group ranked No. 43 as of Tuesday's
IBD, up from No. 74 about three weeks ago and No. 140 about seven
months ago. IBD ranks its 197 industry groups based on six-month
price performance ; the leaders are generally the top 20 to 40
Canadian National has the top IBD Composite Rating within its
industry group, earning a grade of 94 out of a best-possible 99.
It's actually tied at the top withGenesee & Wyoming (
), but that stock doesn't offer a dividend.
S&P analysts also view Canadian National as the top dog,
at least in the area of efficiency.
"We consider CNI to be the most efficiently run of the major
North American railroads by a variety of metrics -- a position it
maintains by constantly seeking new ways to boost asset
productivity," the analysts wrote in a recent note.
Canadian National offers a dividend with an annualized yield
of about 1.6%. It sports a strong EPS Stability Factor of 3, near
the steadiest-possible grade of 0. That steadiness suggests the
company should be able to keep paying its dividend.
However, Canadian National missed Wall Street's expectations
with its third-quarter profit growth of 17%, although that
represented an acceleration from Q2's 13% increase.
The Montreal-based company also gave a cautious outlook for Q4
as it posted Q3 results in October. Plus, Credit Suisse analysts
noted that management "refrained from providing any color" for
Canadian National's stock chart shows a shallow cuplike
pattern taking shape since mid-September. The stock is forming
that pattern's right side and stands only about 3% off its Sept.
In 2012, the stock generally has been making a slow and steady
climb, staying in the vicinity of its 10-week moving average.
The number of U.S. mutual and hedge funds with a stake has
risen for two quarters in a row, according to IBD data.