Two high growth stocks for your portfolio

CNR looks forward to a good 2014

As North America’s most efficient railway, Canadian National Railway (TSX:CNR) has provided guidance for 2014 that includes an expected mid-single digit increase in carload volumes as the North American economy continues to recover.

The recovery and increase in carload volumes lead the company to believe that its earnings for all of fiscal 2014 will top those of 2013 by double-digits.

A solid growth stock, Canada’s largest railway now expects that its adjusted diluted earnings should be above the $3.05 to $3.10 per share guidance the company previously had for 2013. The railway said its revised 2013 forecast is consistent with its initial target of achieving high single-digit growth compared with the adjusted $2.81 per share earned in 2012.

In turn, that implies adjusted diluted EPS of $3.38 to $3.54 in 2014. Analysts polled by Thomson Reuters are collectively forecasting earnings of $3.52 per share, so CNR’s guidance is right in line with that.

“Based on CN’s habit of underpromising and overdelivering, we remain confident in its ability to deliver strong performance, especially in light of its ongoing market share gains and disciplined approach toward the use of capital, which should continue to drive a lower operating ratio,” Said Benoit Poirier of Desjardins Capital Markets in mid-December. CNR is a buy.


Long-term interest rates are on the rise, and that is playing havoc – rightly or wrongly – with REIT prices. To us, this presents an opportunity, as a solid company such as RioCan gets lumped in with the rest of the interest-rate sensitive crowd.

Maybe some investors agree with us: its price is up 3.02% in four months, though it’s also down 7.9% in a year.

This despite RioCan’s recent purchase of part of Primaris REIT, and activity on the acquisition front apart from that as well.

Price and payout are two other factors that make this our favorite REIT. RioCan’s distribution was raised during our third-last update period to $1.41 per unit from $1.38, first payable last February 7. And there is no discussion about how well its price has performed for years now.

Throw in a great earnings track record – third quarter operating FFO were up 2% – and excellent management, and you can feel fairly confident in adding RioCan to your selection of growth stocks as a buy for income and growth.


Money Reporter, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846

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