Investors who shy away from stocks like Canadian National Railway Company (TSX:CNR)(NYSE:CNI) because of their high valuation may be missing out on a bargain. Recent volatility in CN Rail’s shares provides an attractive investing opportunity, according to Raymond James analyst Steve Hansen, who upgraded the stock to outperform this week after downgrading it just one month ago.

Hansen notes that in those four weeks, the stock has dropped a surprising 11.5% compared with a 5.8% decline on the TSX. CN Rail shares were “seemingly caught up in the heightened global/macro uncertainty that’s been reverberating throughout global markets.”

“While it’s been rare for CN to exhibit such volatility/underperformance in recent years, we highlight that the stock enjoyed similar (upside) volatility earlier this summer on the back of a robust second quarter print and a subsequent wave of insider/institutional buying (that ultimately prompted us to downgrade),” said Hansen. “In many respects, we view this reversion as expected.”

Hansen also noted that weekly traffic data is showing signs of improvement, as CN Rail produced its first positive data point last week with revenue ton miles growing 1.8% on an annual basis, following 24 straight months of declines. Hansen attributes the improved traffic to the forest products, intermodal, and automotive segments.

The analyst said his upgrade is further supported by an attractive valuation with shares trading at 15.5 times his 2016 earnings per share estimate, making the stock attractive “not only [on] an absolute basis, but also on a relative basis versus the broader market.”

Hansen maintained a target price of $85 for the shares “due to CN’s best-in-class operating metrics and attractive long-term growth opportunities.”

CN Rail’s latest earnings report was also positive, reporting earnings per share of $1.15, beating estimates by $0.10. Revenue for the quarter was $3.13 billion, just shy of the consensus estimate of $3.17 billion.

CN Rail shares gained midweek after the Bank of Canada suggested that the weak Canadian dollar is starting to have a positive impact on the Canadian economy, particularly on companies that are exchange rate-sensitive exporters.

All told, there’s very little that’s negative in CN Rail’s outlook, including a dividend of $0.31 per share. Investors seeking long-term opportunities should consider further research on the railway’s stock.

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Fool contributor Doug Watt has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.