Any short-term market volatility feels bigger than it really is when we’re stuck looking at daily charts. But zoom out a bit, and things often make more sense. Some of the best-performing long-term stocks have gone through rough patches that later turned into opportunities.
And that seems to be the case with Canadian National Railway (TSX:CNR) right now. While it’s built to weather all kinds of economic conditions and is still growing earnings even when the headlines look shaky, its stock is trading around 17% below its one-year peak.
To me, this drop feels more like a buying opportunity than a reason to worry. In this article, I’ll break down why CNR could be a great stock to hold for the long term.
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CNR stock
Based in Montreal, CNR is one of the largest transportation and logistics companies in North America. It operates a 20,000-mile rail network that connects the eastern and western coasts of Canada with the U.S. Midwest and Gulf Coast. Alongside its core rail business, it offers intermodal shipping, trucking services, and end-to-end supply chain solutions.
CNR shares are currently trading at $140.76 with a market cap of $88.2 billion. Despite its recent slide, it still pays a dependable quarterly dividend with an annualized yield of 2.5%.
Strong financial performance despite the decline
Even with its stock sliding lately, CNR’s operational and financial growth looks strong. In the first quarter of 2025, the company saw a 4% YoY (year-over-year) increase in revenue to $4.4 billion. Similarly, its operating income for the quarter also climbed by 4% YoY to $1.6 billion.
What’s even more important here is that CNR achieved these strong results while facing soft volume in some segments and lingering macro uncertainty. Meanwhile, the company’s operating ratio also improved slightly to 63.4% in the latest quarter — showcasing how it’s keeping costs in check and squeezing more value out of each dollar earned.
Despite macroeconomic concerns, CNR’s ability to consistently generate cash has remained solid. The company’s net profit for the first quarter reached $1.16 billion, with an adjusted net profit margin of 26.4%. The company also generated $626 million in free cash flow during the quarter — indicating that it continues to produce real value for shareholders even in a slower economy.
Why this could be a long-term winner
CNR expects to grow its adjusted earnings per share (EPS) by 10% to 15% in 2025 and continues targeting high single-digit annual EPS growth through 2026. It’s also investing about $3.4 billion this year into capital projects to keep its operations efficient and ready for future demand.
With grain crops in both Canada and the U.S. expected to remain strong, and revenue ton miles projected to grow, CNR’s long-term outlook looks strong. And as one of the few stocks that can offer scale, reliability, and consistent returns, it has a wide moat that’s tough to compete with. Given that, for investors seeking stability with room for long-term compounding, this recent pullback in CNR stock could be a rare chance to buy a top Canadian stock at a bargain.
