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Canadian Pacific (CP) Hits New 52-week High: Here's Why

Canadian Pacific Railway Limited CP hit a fresh 52-week high of $183.82 per share during the trading session on Dec 27 before retracing a bit to close the same at $182.08. Notably, the company’s shares have performed well in the last six months. The stock has rallied 14.5%, outperforming the industry’s gain of 12.3%.



Catalysts Behind the Upsurge

The company’s efforts to check costs to drive bottom-line growth are impressive. Notably, the operating ratio (operating expenses as a percentage of revenues on an adjusted basis) has improved 160 basis points in the first nine months of the year.

In fact, with volume expansion, the company raised guidance for 2017. Canadian Pacific now expects a double-digit rise in adjusted earnings per share for 2017 compared with C$10.29 in 2016.

Canadian Pacific’s initiatives to reward investors through share buybacks and rise in dividend payments are also encouraging. In May, the company hiked its quarterly dividend per share by 12.5% to C$0.5625.

The company’s trailing 12-month return on equity (ROE) supports its growth potential. Not only has its 31.9% ROE remained steady over the last year, the same compares favorably with its industry’s ROE of 21.1%, reflecting that it is efficient in using the shareholders’ funds.

Zacks Rank & Key Picks

Canadian Pacific carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Gol Linhas Aereas Inteligentes S.A. GOL, LATAM Airlines Group S.A. LTM and SkyWest, Inc. SKYW. While Gol Linhas and LATAM Airlines sport a Zacks Rank #1 (Strong Buy), SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Gol Linhas, LATAM Airlines and SkyWest have surged more than 200%, 66% and 42%, respectively, in a year.

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