Topic: Dividend Stocks

CANADIAN PACIFIC RAILWAY LTD. $73 – Toronto symbol CP

CANADIAN PACIFIC RAILWAY LTD. $73 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.9 million; Market cap: $12.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.cpr.ca) has attracted a lot of media attention lately. That’s mainly due to efforts by a U.S.-based investment firm that wants to improve its performance and possibly spark a takeover offer.

In our three-part Successful Investor portfolio strategy, we advise investors to invest mainly in well-established companies, spread your money out across the five main economic sectors, and downplay stocks that are in the broker/media limelight, which can bloat investor expectations.

Downturns can be brutal when stocks fail to live up to those inflated expectations. So, investors have asked why we chose a #1 stock that’s in what they see as ‘the limelight’. The difference is in the definition.

CP has attracted a lot of brokermedia attention. It has mostly been negative, focussing on CP’s recent mediocre performance. But when we refer to stocks in the limelight, we mean those that brokers and the media are hot on. Their enthusiasm tends to rub off on investors.

Negative views on CP have drawn attention away from the great value it offers, both from potential earnings gains and its hidden assets.

CP Rail is up 6% this year but it’s still our #1 buy for 2012.

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