Tuning an instrument like a violin is an exact science, where the end result can be measurable perfection.
Tuning a company to prevailing business conditions is far less precise. The most laudable achievements in efficiency are by nature non-recurring, since the result is a company moving ever closer to perfect pitch.
Canadian National Railway
Quarter after quarter, I have watched with amazement as the railroad industry has squeezed every ounce of profit imaginable out of deteriorating revenue streams by fine-tuning costs and operating efficiency. Despite my cautious fundamental outlook on the sector, leading operators like Burlington Northern Santa Fe
With a big move into future efficiency gains, Canadian National announced this week that it will purchase 70 new high-efficiency locomotives over the next several years. Of those, half will be from General Electric's
Short of screaming "danger" from the rooftops, Canadian National CEO Hunter Harrison echoed the theme of moderating expectations for a swift recovery, stating: "I think we have bounced across the bottom and now we are starting to float to the top." Indeed, the prospect for further deterioration of the greenback vis-a-vis the Canadian dollar threatens to erode earnings in the fourth quarter. Oil's creeping price appreciation raises another red flag.
I continue to view Canadian National Railway as a top competitor from an operational standpoint, but I consider a warm bench at the train station the best position for investors just now.
More than 1,300 Motley Fool CAPS members, including 578 All-Stars, expect five-star pick CNI to outperform the S&P 500. In all, the CAPS community has shared its collective insight on 35 "road and rail" companies. Join the free CAPS community today and share your views on how the rail industry will fare throughout these persistent economic headwinds.
Fool contributor Christopher Barker has never hopped a freight train, but he thinks it would be a fun place to learn the harmonica. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He also tweets. He owns no shares in the companies mentioned. Canadian National Railway is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy never plays on the tracks.