CPKC: The rail connecting Canada/US/Mexico and benefiting from reshoring

An under-appreciated synergy supported growth story with excellent execution and upside potential

Welcome to the 10th investment case and 9th resilience & 5th reshoring/sovereignty idea on Crack the Market (and the most comprehensive CPKC investment case you will find online)! Join me as I dissect one of, if not the best railroad in North America, the only transcontinental rail (Canada/US/Mexico) with significant internal growth from the industry’s last big merger, which has created what should be a major winner of US reshoring.

Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.

Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.

You can already read my first 9 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:

• ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.

• LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.

• Atlas Copco (resilience & reshoring idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.

• Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.

• Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.

• Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.

• Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.

• Roper (resilience idea): A resilient cashflow compounder in the software space with inflecting growth.

• RELX (resilience idea): The company to own forever – one of the very best businesses on Earth.

After reading this article, you will understand why this company is so special as the only transcontinental railroad in North America, making it a key beneficiary of the nearshoring and reshoring, what it does and why its business model is so defensive, why its strong self-help/synergy driven earnings growth plan is seriously underestimated by the market, and why it remains one of the best businesses to own for the next decade (after an uncharacteristic period of underperformance for the rail sector).

In this article I go through:

1. CPKC’s business and how it sits on a powerful, diversified and durable earnings growth engine.

2. Why the rail sector has suffered an uncharacteristic period of underperformance and why 2025 might just be the year of inflection.

3. How CP’s acquisition of Kansas City Southern in 2023 made it the only transcontinental (Canada/US/Mexico) railway and provides scope for higher growth thanks to revenue synergies + exposure to reshoring by US companies.

4. How the company aims to deliver HSD revenue and DD EPS growth going forward, the highest in the sector, underpinned by volumes, synergies and pricing.

5. How this defensive cash machine is starting to return meaningful cashflow to shareholders. The company is executing on its plan in an excellent way, which investors are not acknowledging.

CPKC Investment Case