Replies to post #417 on Rockwell Automation (ROK)

[Investorman]

I have been thinking more about railroads.......

OK - Buffet's plunge into BN got me started. Motley Fool likes Canadain National (CNI) and I have done some looking at it and am getting more interested as I look. They currently have a net profit margin of 26%. There are a number of reasons why CNI is really attractive so I might take the plunge.

Canadian National Railway Company (CN) directly and through its subsidiaries, is engaged in the rail and related transportation business. CN’s network of approximately 20,400 route miles of track spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. The Company’s network, in addition to co-production arrangements, routing protocols, marketing alliances and interline agreements, provide CN customers access to all three North American Free Trade Agreement (NAFTA) nations. CN’s freight revenues are derived from the movement of a portfolio of goods, including petroleum and chemicals, grain and fertilizers, coal, metals and minerals, forest products, intermodal and automotive. During the year ended December 31, 2007, no individual commodity group accounted for more than 20% of revenues.

[Investorman]

There are several reasons for liking CNI. Unlike all our failing institutions, their assets don't disappear in balance sheets. When you own 20,000 miles of track you don't have to worry about waking up one morning and finding out it has shrunk to 5,000 miles of track.

Why CNI you ask? Ok, you didn't but I'll tell you anyway. It has a unique track network that runs to 3 coasts. East, West, and the gulf of Mexico. So what do they ship that is a big deal besides all that grain from Central Canada? Well, there is the the coal and oil from all those tar sands that CMKXers are so fond of talking about. The railroad doesn't have the risk of finding it.... Like the people who sold picks and shovels to the miners, they let others take the risk and make a guaranteed profit moving it to market.

Canada has 5 times as much oil as Saudi Arabia locked up in those tar sands and it is now (due to the price of oil and new technology) economically viable to pull it out.

Definitely worth taking a look at and maybe start dipping my toe in.

[Investorman]

Split adjusted, CNI was $9 a share 10 years ago; now it is $40. It has had 3 two for one splits during that 10 years.

A four bagger in penny terms or a 400% gain in the last ten years.

1000 shares bought ten years ago would be 8000 shares today.

And it pays a dividend - lol.