If you’ve spotted a truly magnificent stock that you’d be willing to hold for the long haul, you don’t need to hit that sell button and take profits off the table after a sizeable run. Indeed, strength can beget even more strength, and while it’s never a good idea to lose sight of the valuation, I do think that investors should carefully weigh how the fundamentals and growth story have changed over time.
Indeed, if things are looking up for the fundamentals, a higher price of admission should be paid. In any case, this piece will focus on one Canadian stock that’s down around 28% from peak to trough. And while the performance has been anything but wonderful in recent years, I do think that the stock remains a great value buy, especially as the dividend yield approaches highs not seen outside of crisis and crash conditions.
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CN Rail stock: Down but certainly not out
Indeed, CN Rail (TSX:CNR) stock has been off the rails of late, with the shares recently sinking right back to $130 and change per share after clocking in some underwhelming quarterly results. The company also lowered its full-year outlook amid Donald Trump’s tariff threats. Indeed, things have gone from bad to worse for CN Rail. And while the current bear market is one of the most brutal, I do think that there’s a case for braving the dip as new multi-year depths (we haven’t seen shares of CNR this low since the depths of 2021) come to be.
With more industry unknowns ahead as tariffs look to take a bite out of the quarters to come, there’s really not all too much to get behind. CN Rail needs a catalyst.
Whether that’s in the form of a big acquisition or a big change in leadership, I do think that investors will reward any such big changes the firm commits to. In any case, it’s all about navigating external headwinds facing the firm in the second half. While outside pressures have been mounting, it’s hard to ignore the fact that CNR shares have taken a far harder hit than those of many of its top rivals.
The latest quarterly flop hurts
While the latest second-quarter fumble and guidance were a colossal disappointment, I’m not so sure if it’ll be a driver for big change. For now, it seems like CNR stock is well on its way to being down 30% from peak to trough. And with an uncertain economy ahead, there’s really not all too much, perhaps other than the low valuation, to justify buying the latest dip in the now unloved name as it’s left behind amid the great TSX Index rally of 2025.
Can CN Rail catch up and become magnificent again?
I have no idea. Either way, the company’s moat remains wide, and opportunities could come afoot as consolidation activity picks up across the broad rail transport industry. In any case, it’s clear that investors are getting fed up with the relative underperformance, and many may be throwing in the towel right here at just north of $130 per share.
At 17.9 times trailing price-to-earnings (P/E), I think shares are too cheap to ditch. Expectations are at their lowest point in a while, and the company’s problems are fixable, in my opinion. The firm just needs the right talent to execute a game plan to get back on top. Who knows? Perhaps activist investors will return to push for change after the latest bear market.
