When it comes to phrases that fit the bill, “steady as a rail” has to be one of the best when it comes to discussing Canadian railways. Yet, over the last few years, there was a battle between our duopoly that caused some upset in share prices. Investors may not know where to turn.
However, when it comes to the future of railway companies, there really isn’t anything to fear. This is why right now, Canadian National Railway (TSX:CNR) looks like such a strong buy. Without going off the rails, let’s get into why CNR stock is a no-brainer value stock to buy on the TSX today.
From bottom to top
The next year could start off difficult and end well for CNR stock among railway companies. These companies will have to deal with lower volumes at the beginning of 2024, but this should certainly see growth coming into the second half of 2024.
For now, CNR stock has seen a decline in revenue by 0.8% year over year thus far in the fourth quarter. Meanwhile, competitors have seen growth, which has led some analysts to trim targets for CNR stock. And while that could be a problem for the near future, in the long term, this could pose a great opportunity.
After all, CNR stock has been around for over 100 years, with the company expanding across Canada in that time. So, with shares up 15% in the last few months, now could be the time to jump back on board.
Positive trends coming
Analysts have recently weighed in on CNR stock to say that there are positive trends coming in for some of the rail company’s best revenue producers. This would include items such as petroleum, chemicals, potash and vehicles. The first half of 2024 will remain difficult, with Canadian grain also providing difficulty from a weaker harvest this year.
However, volumes will likely increase during the second half of 2024. This should achieve a significantly healthy rebound in share price, revenue and earnings per share for CNR stock. Yet investors don’t want to wait around, and with a volatile market, it’s clear why.
But I urge investors to think long term. CNR stock was in the battle to take over Kansas City Southern in the last few years, focusing heavily on growth through acquisitions. Today, the focus is back on being the best of the best in premier railways. And that focus should drive more companies to use the stock for their products.
Bottom line
The next half of 2024 will be difficult for railway companies. Yet, over time, these companies are the best of the best for steady revenue growth. While there are minor fluctuations, overall CNR stock and others have proven their worth time and time again.
Transportation will remain particularly beneficial as the world continues to demand products reaching their door in a few days’ time. Railways continue to provide an inexpensive and more stable method of having products reach their destination over airlines and trucking.
With that in mind, CNR stock certainly has a solid future ahead. And with a 1.91% dividend yield and shares on the rise, now is a great time to buy this long-term hold.
