Since the Organisation of Petroleum Exporting Countries' announcement over Thanksgiving that it would maintain is oil production, the entire energy sector has seen a dramatic sell-off. Rail companies like Canadian National Railway (NYSE:CNI)(TSX:CNR) were also caught in the downdraft.
CN Rail is a company that I have followed quite closely as an analyst for Stock Advisor Canada. Seeing it pullback nearly 10% in less than a week on this news gave me all the reason I needed to finally pull the trigger on it in my Real Money Portfolio.
Speaking with CN Rail's VP of Investor Relations, Janet Drysdale, earlier this year, she was optimistic about the company's opportunities in transporting crude oil. However, it's importance to the company is nowhere near the 10% in market capitalization that unrealistic investors sold off this past week.
In 2013, crude-by-rail only accounted for around 4% of CN's revenue, and just 70,000 carloads out of a total 5 million! Compare that to Canadian Pacific (NYSE:CP)(TSX:CP) which relied more heavily and operated 90,000 c-b-r cars in 2013.
CN Rail has far too much going for it right now to let this be a deterrent. On top of this, fuel equated to 24.3% of CN's operating costs in its most recent quarter. If oil prices remain subdued for any length of time, that could be a temporary boost and potentially offset any loss of rail traffic.
Because of this, I will be adding CN Rail to my portfolio shortly.
Taylor Muckerman has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.