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Canadian Pacific Kansas City Li (CP) Stock Forecasts
Summary
Canadian Pacific operates a transcontinental railway in Canada and in the Northeast and Midwest U.S. It recently acquired Kansas City Southern. The combined company transports products ranging from bulk commodities to merchandise freight across a 20,000-mile rail network and has nearly 20,000 employees.
We think that CP shares are attractively valued at current prices of around $82, near the high end of their 52-week range of $65-$85. From a technical standpoint, the shares have been in a bullish pattern of higher highs and higher lows since March.
To value the stock on a fundamental basis, we review historical P/Es and peer group valuations, and run our forecasts through a dividend discount model. CP is currently trading at 24-times our 2024 EPS estimate, at the high end of the five-year historical range of 14-24 and above the North American peer average of 19. We think this is a reasonable valuation given the company’s long-term record of outperformance. Our 12-month target price is $92.
On July 31, BUY-rated CP closed at $82.29, down $0.76. (John Eade, 7/31/23)
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Analyst Profile
John Eade
President & Director of Portfolio Strategies
John is chairman and CEO of Argus Research Group and president of Argus Research Company. Over the years, his responsibilities at Argus have included chairing the Investment Policy Committee as then director of research; helping form the firm’s overall investment strategy; writing a weekly investment column; and authoring the flagship Portfolio Selector report. He has also provided coverage of the Healthcare, Financial and Consumer sectors. John has been with Argus since 1989. He has an MBA in Finance from New York University’s Stern School of Business and a Bachelor’s degree in Journalism from Northwestern University’s Medill School of Journalism. He has been interviewed and quoted extensively in The New York Times, Forbes, Time, Fortune and Money magazines, and has been a frequent guest on CNBC, CNN, CBS News, ABC News and the Bloomberg Radio and Television networks. John is a founder and board member of the Investorside Research Association, an industry trade organization. He is also a member of the New York Society of Security Analysts and the CFA Institute.
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