Canadian Pacific Railway Limited
), one of the leading Canadian railroad companies has begun
operations at its latest intermodal terminal at Saskatchewan's
Global Transportation Hub in Regina.
The new terminal with actual capacity of 250,000 container
handlings per year is located near the company's main networks
between Regina and Moose Jaw. To benefit from the current boom in
the energy markets the company is building networks for shipping
frac sand, pipe and construction material as well as other goods
required for oil and gas shale production.
This would enable an easy access to the main production
facilities and provide an opportunity to transport large volumes
to key regions. The company has assigned long-term investment of
nearly C$2.3 billion for 2011-2028.
However, we remain concerned about the prevailing economic
volatility in the U.S. and abroad that may keep Canadian
Pacific's top-line growth under pressure in the near future.
Moreover, the near-term growth for the company is expected to be
tempered by lower coal production.
Lower natural gas prices resulting in weak utility coal market
have raised significant concerns limiting overall coal shipments,
despite strong exports to Asian countries. In addition, weak U.S.
grain shipment due to volatility in feed shipments will remain
significant headwinds for the company.
Further, competitive threats from major rivals like
Canadian National Railway Company
), a highly unionized workforce, and regulatory pressures may
limit the upside potential of the stock.
Canadian Pacific currently holds a short-term (1-3 months)
Zacks Rank #3 (Hold). For the long term, we have a Neutral
recommendation on the stock.
CDN NATL RY CO (CNI): Free Stock Analysis
CDN PAC RLWY (CP): Free Stock Analysis Report
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