DoctorFaustus

Canadian Pacific Railway; All Aboard the Future Express?

Long
NYSE:CP   Canadian Pacific Railway Limited
DISCLAIMER
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. I am obviously not rich, so obviously I haven't made it with my own thinking, so definitely don't put faith in me. But maybe read and learn about a company that is making some major news, and maybe building some steam to lay track into the future.

Also a major disclaimer, I am always ready with train puns, so orient yourself appropriately, throw some coal onto your mind's fire and lets chug along.

BRIEF Thesis and History
Despite what is taught in school, it was neither the needless slaughter and enslavement of foreign or indigenous peoples that serves as the boiler for progress and development; it is the major investment in construction and maintenance of infrastructure allowing for the rapid transportation of goods, services and people. The internet age isn't special because now we can download high definition videos of steam locomotives making their way in and through tunnels, around beautiful landscapes, or perhaps even the more urban environments; it is because information, ideas, knowledge, services, and in a way, people have instant access to each other across the world. Until I can tell the Computer to 3D print me a delicious chicken dinner and shower with pure air, these resources need to get to me. Long ago, it was the rail network that built America, and still keeps it running today. While trucks are a major part of goods transportation, it is the rail network that conducts progress forward. The construction of the rail networks across America were the biggest step forward in uniting a divided people, and in spreading the clutches of industrialism across the West. And while North America lacks, and has lacked, progress on their rail network, Biden could change that. If any of that $4.5 trillion infrastructure plan goes into improving the rail networks, either for transportation of goods or people, then this could be the emergency cord that this caboose has been looking for.

Strategic Thoughts
It rolls like this, we are in the midst of a consolidation of the train companies in North America. Warren Buffett and CP were fighting over Kansas City Southern. CP won, but word on the street is Warren Buffett is still looking for a sleeper car to hitch a ride on. I won't go into those details, google it a little and you can probably find a good rail to hop on. I believe it is this consolidation of the Rail Network companies that is going to lead to a much larger jump, or at least a continuation of the current growth channel, long term. Just like in stocks, consolidation periods lead to dramatic changes. As the train companies consolidate into a few bigger ones, spreading across all of North America, it becomes easier to move forward in a unified direction. Democrats have shown their willingness to drive modern trends of capital consolidation by rewarding fewer companies the majority of government work. I expect this to continue, and as American-Canadian-Mexican relations improve, it will give these companies even more power.

I don't know how much longer the current growth channel lasts, but the previous channel was great, so there is some berth for possible profit. CP is a $50 billion market cap, KSU is $25 billion, I doubt the merger just makes them $75 billion. Either way, CP has had an amazing and stable growth over the last few years. Keep an eye out on this one to fill some long term investment strategies, or look out for a big impulse wave formation coming up.
Comment: Even I am impressed with how well the channel has held up despite the Kansas City bid falling through, and CP making a significant point that a failure to merge with KSU, and it merging with rival CN, would be disastrous to CP. This may be a good time to play conservatively on this stock!

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