Canadian Pacific railway (CP) has been chugging along at a great rate in the stock market. In May, stock was available for purchase at a cost of $37.47 and if you were smart to purchase it then, you’re up 33%.
An increase in the rate of commodity shipments (potash, coal) has slowly become more evident, but experts are calling for a greater boost going into 2010. At the moment, rises in efficiency are adding to the good news.
In order for CP to rise substantially, they must make significant investments in the near future in order to improve and develop its track network. Long-term institutional investors (IIs) will likely accept the changes in return for sufficient revenue increase. First Call FY2009/FY2010 EPS estimates for CP are $2.36 to $3.06.
CP’s stock chart was corrected to about $41 following psychological resistance at $50 in late summer. The recent rise above the key, 50-day moving average confirmed this correction.
The Sell/Stop Loss for CP has been raised to $37 from $17, making this stock almost a zero-risk trade for May-bought shares.
The CP stock itself is a moderate-risk stock. If you have already bought-in to the company’s shares, it’s probably best to keep them. If you haven’t, it might be wise to purchase a 50% position in CP now; adding a 25% in a month, if economic conditions do not worsen. Don’t plan on buying more than 75% before December 2009.