Canadian National Railway
Canadian National Railway (TSX: CNR) (NYSE: CNI) is a transportation and logistics company with 20,000 route miles across Canada and the United States. The company has returned over 20% this year, easily outperforming the larger stock markets.
The company’s revenue fell 11% year-over-year in the September quarter. Lower volumes in its major product groups and lower applicable fuel surcharge rates resulted in lower revenues, partially offset by higher freight rates and increased shipments of Canadian grain.
Meanwhile, the company’s tonne-mile (RTM) revenue improved throughout the third quarter, while the RTM company saw year-over-year growth in September, indicating increasing demand for certain commodities. Its operating expenses were down 8% due to lower fuel and labor expenses and lower purchased services and material expenses. The company’s operating ratio rose 200 basis points to 59.9%, which is encouraging.
The company’s management said it was cautiously optimistic for the fourth quarter and 2021. The company’s well-diversified income base and improving economy could support its finances in the years to come. Additionally, Biden’s victory could boost fluid trade across the United States and the Canadian border, which could benefit the company.
FPI NorthWest Healthcare Properties
FPI NorthWest Healthcare Properties (TSX: NWH.UN) owns and operates 190 properties covering 15.4 million square feet in seven countries. The company focuses on real estate investments in the healthcare sector, which are highly defensive and immune to economic downturns.
Yesterday, NorthWest Healthcare Properties REIT released its third quarter results. The company’s net operating income rose 34% to $ 72.2 million, while AFFO (adjusted funds from operations) rose 12.3%. Its occupancy rate remained high at 97.2%, with more than 80% of its income generated by direct or indirect public health financing. Thus, the company’s cash flow is stable. Despite the difficult period, the company formally collected or deferred 97.6% of its revenues. In October, it improved further to 98.1%.
NorthWest Healthcare Properties REIT pays monthly dividends of $ 0.067 per share at an annualized payout of $ 0.8. Its forward dividend yield is currently 6.8%. So given its stable cash flow, the growth of the asset management platform and its high dividend yield, I am bullish on NorthWest Healthcare Properties REIT.
My third choice would be one of the biggest cannabis companies in terms of market capitalization, Canopy growth (TSX: WEED) (NYSE: CGC), which is up nearly 25% this month. The legalization of cannabis by five US states and its impressive performance in the second quarter drove its share price.
New Frontier Data predicts legal cannabis sales in the United States to reach $ 35 billion from $ 13.2 billion in 2019 at a CAGR of 18%. With more states legalizing cannabis, more people would be moving towards legal sale. In 2019, only 17% of total cannabis sales were legal. Meanwhile, the tech-driven analytics firm predicts that the legal contribution from sales will reach 34% by 2025. So, given the huge growth potential, Canopy Growth is focused on expanding its business. in the USA.
In July, Canopy Growth launched an e-commerce website that sells all of its SKUs through its brands. He is also working on the launch of THC infused drinks in the summer of 2021 in association with Acreage Holdings. In addition, the company succeeded in reducing its Adjusted EBITDA losses by 43% in its second quarter. Management expects to report positive EBITDA in fiscal 2022.
Given the growth of its addressable market, improving margins and a strong balance sheet, Canopy Growth can deliver superior returns over the next three years.
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David Gardner owns shares of Canadian National Railways. The Motley Fool owns stock and recommends Canada’s National Railways. The Motley Fool recommends Canadian National Railways REIT units and NORTHWEST HEALTHCARE PPTYS. Silly contributor Rajiv Nanjapla has no position in any of the stocks mentioned.