Sell: Canadian National Railway Co (TSE: CNR)
We are exiting our position in CNR. The company has delivered disappointing performance in recent years, and the stock has become a low-growth utility. Last quarter’s results were disappointing, especially when compared to peers UNP and CP, which have greater business exposure to the stronger economy south of the border. With recent strength in the shares, we think it is an opportune time to trade CNR for a higher-quality alternative.
Buy: Linde PLC (NASDAQ: LIN)
We are initiating a position in Linde. The company is a “sleep well at night” stock. It offers the defensive characteristics of a utility with the structural growth potential of the energy transition theme. In contrast to CNR, it has demonstrated an ability to grow earnings despite a stagnant industrial environment over the last few years. Linde operates in a more attractive oligopoly with strong pricing power and limited competitive threats.
