Canadian Pacific Kansas Metropolis (TSX:CP) continues to be a diamond within the tough. Shares of CP inventory are climbing greater and better even because the market drops. In truth, shares of CP inventory proceed to commerce round all-time highs.

Whereas Canadians definitely can discover a whole lot of offers on the TSX at this time, I’d nonetheless think about CP inventory to be an ideal long-term deal. Let’s get into why, proper now.

What occurred

Over the previous couple of years, CP inventory has gone by a lot. The previous decade or so, actually. The corporate obtained a brand new administration crew that introduced the hammer down. It lower pointless spending, which included closing rail yards and shedding staff.

After getting its funds underneath management, it was time to broaden. This included updating infrastructure, in addition to investing in hydrogen-powered rail automobiles. However the largest change got here in the previous couple of years alone.

CP inventory was in a heated battle to carry Kansas Metropolis Southern Railway into the fold. After an enormous backwards and forwards that has lasted years, the corporate lastly obtained approval from the Floor Transportation Board of the US. It’s now formally the one railway that may run from Canada all the way down to Mexico.

This has led to the joy of traders and analysts alike, and but, issues are solely beginning to warmth up.

What we will stay up for

The profitability enhancements that CP inventory has undergone over time have been nothing wanting miraculous. It went from being one of many worst-ranked performers within the rail business, to among the finest by 2019, in response to analysts.

The brand new partnership with Kansas Metropolis will definitely be a expensive one, which is why the dividend was sliced in half over the previous couple of years. Nevertheless, the corporate then introduced on a stable quantity of recent enterprise in 2022, and that ought to enhance even additional with the acquisition of Kansas Metropolis.

But it’s vital to notice that earnings have been fairly sturdy even earlier than the merger. And that’s anticipated to proceed. Whereas the near-term could be weaker on the again of decrease financial efficiency, long-term traders ought to definitely think about shopping for and holding the inventory.

Backside line

Something may occur within the subsequent few years when it comes to CP inventory, and actually it already has. Shares have gone greater and better on any potential momentum from this acquisition. CP has fairly a protracted methods to go to repay the billions it value to tackle Kansas Metropolis, however general the growth ought to profit income rather a lot.

Shares stay up 12% within the final 12 months, however are about steady with the place they have been firstly of 2023. They’re additionally down about 8% from heights achieved earlier this 12 months, because of decrease earnings than hoped for.

Even so, long-term progress potential shouldn’t be ignored for traders in CP inventory. Shares of the corporate may even double within the subsequent 12 months or two because the market recovers, and Kansas Metropolis income rolls in. So definitely think about placing CP inventory in your long-term watchlist.