We came across a cheap thesis for Canadian Pacific Kansas City Limited in Roche Capital’s Substack by Pedro Ortiz. In this article, we will summarize the bulls thesis on CP. The lowest price of shares of Canadian Pacific Kansas City Limited in April 2019 is 83.71 US dollars. CP’s trailing and forward P/E were 25.21 and 21.79 respectively according to Yahoo Finance.
Canadian Pacific Kansas City Limited, together with its subsidiaries, owns and operates transcontinental railroads in Canada, the United States and Mexico. CPKC has emerged as a compelling long-term investment following excellent performance in 2025. The company reported revenue of C$15.1 billion, a 4 percent increase in 2024, with revenue ton-miles also up 4 percent, primarily reflecting organic growth. Operating efficiency remains at a high level, with an adjusted operating ratio of 59.9 percent for the year and a record 55.9 percent in Q4, underscoring superior cost control.
Adjusted EPS rose 8 percent to C$4.61, outpacing revenue growth, while operating cash flow reached C$5.3 billion, with a return on equity of 75 percent and a target of 90 percent by 2028. CPKC’s unique integrated network linking Canada, the US, and Mexico positions it to capture the trade flows of the already successful trilateral geneger with Crilateral Trade flows 2 billion. 2025 and is expected to exceed C$1.4 billion by 2026.
Post-merger performance improvements include a 13–14 percent increase in train and car speeds, higher train productivity, and industry-leading safety with 0.85 accidents per million rail miles. The company’s portfolio is very diverse, including bulk cargo, general cargo, and flexible transportation, while the intermodal and Mexico corridors are showing early but promising growth.
ROIC is improving on a large post-merger capital base, with an increasing return on capital, supported by disciplined investments and a 5 percent share buyback plan. Risks include tariffs, trade agreement negotiations, sector consolidation, agricultural volatility, and the introduction of new intermodal services. For long-term investors, CPKC offers a solid, high-risk infrastructure business with predictable earnings growth, strong management, and a clear path to value accumulation, although near-term entry requires prudence given current market valuations.
Previously, we included a bullish thesis at Union Pacific Corporation (UNP) by Peter Thomason in May 2025, which highlighted the structural advantages of the rail industry, long-term pricing power, and strong cash flow in the concentrated North American market. UNP’s stock price is down about 20.72% since our coverage. Pedro Ortiz shares a similar view but emphasizes CPKC’s operations, synergies, and network integration across Canada, the US, and Mexico as key long-term value drivers.
