Canadian National Railway (TSX: CNR) is already up more than 10% this year. Investors who missed the bounce are wondering if CNR stock is still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
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CNR share price
Canadian National Railway trades near $150 per share at the time of writing. This is up from the 12-month low around $126, but is off the nearly $180 it reached two years ago.
The action in 2026 has been choppy. CNR surged from $131 in early February to $154 at the start of March as bargain hunters moved into the stock on the hopes that the trade dispute between Canada and the United States will get sorted out by the end of the year. The stock gave back most of that gain in the first three weeks of March, before bouncing back above $150.
Risks
The war in Iran and the blockage of the Strait of Hormuz has driven the price of oil above US$100 per barrel. High oil prices will push up inflation, which could set off a global recession. An extended economic downturn would be negative for CN as there would be reduced demand for its services. Elevated oil prices also drive up the cost of fuel used by CN’s trains. If the rise in fuel expenses can’t be passed on to customers there will be an impact on profits.
Tariff uncertainty remains a threat, as well. The Canada-U.S.-Mexico Agreement (CUSMA) has a July 1st deadline for a decision to either extend the trade pact or end it, with a wide variety of potential other arrangements taking its place. Negotiations are ongoing and it is likely that an agreement will not be in place by the end of June. The longer the situation remains unclear, the bigger the threat to CN’s results this year. The company said tariffs had a negative impact of about $350 million on the 2025 financial results.
Consolidation in the American rail sector is another item for investors to keep in mind. Union Pacific and Norfolk Southern are hoping to merge in a US$85 billion deal that would create a rail giant in the United States with a network of tracks that would connect more than 40 states, 100 ports, and run from the Atlantic to the Pacific.
CN’s tracks in the United States run north from the Gulf Coast to Canada where they connect to the domestic routes that also run from the Atlantic to the Pacific. In the event the merger between UP and NS gets approved, there could be negative effects for CN, but the extent won’t be known until the deal happens.
Upside
CN will likely pick up a new tailwind as soon as Canada, the United States, and Mexico iron out a trade deal that provides tariff certainty for businesses that are holding back on investments. At the same time, an end to war in the Middle East would likely bring oil prices back down, helping ease the risk of a global recession.
CN continues to generate good profits and the board is taking advantage of the depressed share price to buy back stock using excess cash. CN is also maintaining steady dividend growth, despite the economic uncertainties.
Time to buy CN?
The broader market is due for a pullback and CUSMA negotiations could drag on for some time, so it wouldn’t be a surprise to see CNR stock dip back to the 2026 lows at some point.
That being said, investors with a buy-and-hold strategy might want to start nibbling on any new weakness. The long-term outlook for the stock should be positive and any good news on the CUSMA negotiations could send the shares significantly higher.
