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Tuesday’s TSX breakouts: This industry leader is on track for steady earnings and dividend growth

The number of stocks on the positive breakouts list (stocks with positive price momentum) is now up to 97 companies as the S&P/TSX composite index staged its eighth day of consecutive gains on Monday.

The list of positive breakouts remains concentrated in resource stocks with 30 per cent of the stocks with positive price momentum from the energy sector, and gold and silver stocks representing approximately 20 per cent. However, the list is broadening out to stocks levered to global economic growth, such as Canadian National Railway Co. (CNR-T), which is discussed below.

A brief outline is provided that may serve as a springboard for further fundamental research.

The company

CN Rail is an industry leader, operating a rail network across the country and down to the Gulf coast of the United States.

On Jan. 26, the company reported better-than-expected fourth-quarter results after the market closed. Earnings per share came in at $1.18, above the consensus forecast of $1.11, and the stock price moved marginally higher, up just 0.6 per cent the following day.

Claude Mongeau, the company's chief executive officer, provided a cautious outlook stating, "Although the economic environment remains challenging, CN will continue to leverage its franchise strength and industry-leading efficiency. For 2016, the Company expects to deliver mid-single digit EPS growth."

Dividend policy

Management remains committed to its dividend. In January, the company announced a 20 per cent hike in its quarterly dividend, raising it to 37.5 cents per share from 31.25 cents per share. On a yearly basis, this amounts to $1.50 per share, equating to an annualized yield of 1.9 per cent.

Valuation

The stock is trading at a price-to-earnings multiple of 17.1 times the 2016 consensus estimate. According to Bloomberg, shares of CN Rail are trading at discount to its three-year historical average of 18.4 times, and relatively in-line with its five-year historical average of 17.2 times.

Analysts' recommendations

According to Bloomberg, there are 12 buy recommendations and 15 hold recommendations. There are no sell recommendations. The average one-year price target is $81.38, suggesting that the share price is nearly fully valued.

The consensus earnings per share forecast is $4.67 in 2016, up from $4.44 in 2015, and forecast to rise nine per cent to $5.11 in 2017.

Chart Watch

Over the last year, the share price has been trading sideways, consolidating largely between $70 and $80.

The stock's next resistance level is around $80, then around $83 and after that around $85. There is downside support around $76, close to its 200-day moving average ($76.18). Failing that, there is support at $75.50, near the stock's 50-day moving average ($75.52), and there is large support at $70.

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a stock to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a stock appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

Below is a list of stocks in the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Stocks on the positive breakouts list have displayed positive price momentum during this period. Stocks on negative breakouts list have experienced negative price momentum.

Positive Breakouts
AGF.B-TAGF Management Ltd
AGT-TAGT Food & Ingredients Inc
AGI-TAlamos Gold Inc
AD-TAlaris Royalty Corp
ARX-TARC Resources Ltd
AKG-TAsanko Gold Inc
AVO-TAvigilon Corp
BTO-TB2Gold Corp
BAD-TBadger Daylighting Ltd
BNS-TBank of Nova Scotia
BNK-TBankers Petroleum Ltd
BTE-TBaytex Energy Corp
BEI.UN-TBoardwalk Real Estate Investment Trust
BNE-TBonterra Energy Corp
BXO-TBoulder Energy Ltd
BEP.UN-TBrookfield Renewable Energy Partners LP/
CNR-TCanadian National Railway Co
CNQ-TCanadian Natural Resources Ltd
COS-TCanadian Oil Sands Ltd
REF.UN-TCanadian Real Estate Investment Trust
CCL.B-TCCL Industries Inc
CCA-TCogeco Cable Inc
CGO-TCogeco Inc
CPG-TCrescent Point Energy Corp
DDC-TDominion Diamond Corp
DPM-TDundee Precious Metals Inc
ELD-TEldorado Gold Corp
EMP.A-TEmpire Co Ltd
ENB-TEnbridge Inc
ENF-TEnbridge Income Fund Holdings Inc
ECA-TEncana Corp
EDR-TEndeavour Silver Corp
ERF-TEnerplus Corp
FSZ-TFiera Capital Corp
FTT-TFinning International Inc
FR-TFirst Majestic Silver Corp
FN-TFirst National Financial Corp
FM-TFirst Quantum Minerals Ltd
FVI-TFortuna Silver Mines Inc
GTE-TGran Tierra Energy Inc
HSE-THusky Energy Inc
IGM-TIGM Financial Inc
INE-TInnergex Renewable Energy Inc
IPL-TInter Pipeline Ltd
KGI-TKirkland Lake Gold Inc
KDX-TKlondex Mines Ltd
KPT-TKP Tissue Inc
LIF-TLabrador Iron Ore Royalty Corp
LSG-TLake Shore Gold Corp
L-TLoblaw Cos Ltd
LUN-TLundin Mining Corp
MDI-TMajor Drilling Group International Inc
DR-TMedical Facilities Corp
MST.UN-TMilestone Apartments Real Estate Investm
MRT.UN-TMorguard Real Estate Investment Trust
MSI-TMorneau Shepell Inc
NGD-TNew Gold Inc
NIF.UN-TNoranda Income Fund
NBZ-TNorthern Blizzard Resources Inc
NPI-TNorthland Power Inc
NG-TNovagold Resources Inc
OGC-TOceanaGold Corp
PPY-TPainted Pony Petroleum Ltd
PAA-TPan American Silver Corp
POU-TParamount Resources Ltd
PPL-TPembina Pipeline Corp
PGF-TPengrowth Energy Corp
PWT-TPenn West Petroleum Ltd
PSK-TPrairieSky Royalty Ltd
PD-TPrecision Drilling Corp
RET.A-TReitmans Canada Ltd
RIC-TRichmont Mines Inc
REI.UN-TRioCan Real Estate Investment Trust
RSI-TRogers Sugar Inc
RUS-TRussel Metals Inc
SAP-TSaputo Inc
SEA-TSeabridge Gold Inc
SES-TSecure Energy Services Inc
SLW-TSilver Wheaton Corp
SNC-TSNC-Lavalin Group Inc
SOX-TStuart Olson Inc
STB-TStudent Transportation Inc
SGY-TSurge Energy Inc
TCK.B-TTeck Resources Ltd
X-TTMX Group Ltd
TOG-TTORC Oil & Gas Ltd
TIH-TToromont Industries Ltd
TOU-TTourmaline Oil Corp
TCL.A-TTranscontinental Inc
TET-TTrilogy Energy Corp
VET-TVermilion Energy Inc
WJX-TWajax Corp
WPT-TWestport Innovations Inc
WTE-TWestshore Terminals Investment Corp
WIN-TWi-LAN Inc
YRI-TYamana Gold Inc
Y-TYellow Pages Ltd
Negative Breakouts
CAS-TCascades Inc
LMP-TLumenpulse Inc
SCC-TSears Canada Inc
TS.B-TTorstar Corp

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