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There aren’t all that many investors who are willing to commit to holding a stock for a few years, let alone a lifetime. Indeed, with the S&P 500 breaking out and trading activity surrounding high-momentum names spiking, it’s no mystery as to why so many new and young investors would rather take a chance on a hot stock that’s “working” than go for a rather untimely play that’s fallen so far from its own peak.
Indeed, value investing matters, especially at times like these, when meme stocks and momentum are the main topics of conversation around the workplace water cooler. Indeed, a boring approach may very well be what helps long-term investors do well without feeling the brunt once the next significant market drop comes around.
CNR stock: A dividend growth stock to buy in a bear market
So, if you’ve got patience and an appetite for value, perhaps CN Rail (TSX:CNR) stock is worth a look now that it’s back on the retreat and looking to flirt with multi-year lows again. Today, shares trade at $136 and change after their sudden relief rally began to fail in July.
Indeed, for CNR shareholders, it’s another year in the red. And while there’s no news or calls for a new CEO, I do think that pressure could begin to build if CNR stock doesn’t sustain any sort of gain over the medium term. Indeed, the stock is now down nearly 24% from its all-time high, last seen at the beginning of 2024.
Is a railway merger boom underway?
Possibly. In any case, we’ve seen considerable consolidation activity in the rail sector in recent years. And going into the back half of 2025, I do think we could see such acceleration as the rail industry experiences an urge to merge of sorts. Of course, CN Rail missed out on the opportunity to buy Kansas City Southern.
And with Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) reportedly looking to give eastern-U.S.-focused railway CSX a closer look shortly following news of another potential U.S. rail blockbuster deal in the works, it’s hard not to have higher hopes for CN as consolidation activity picks up going into late summer. If more than one blockbuster merger happens in the next 12–18 months, there won’t be many dance partners left for CN Rail, which may need one to give its stock a jolt after sinking lower for a few years. Indeed, rail acquisitions do not come cheap, especially at this time of year.
But given there aren’t all too many opportunities to come around and the fact that there could be a scarcity premium of sorts if a few rail mega-mergers do happen in the coming quarters, I think CN Rail would be wise to consider what’s still out there. Indeed, if that means getting in another bidding war, then so be it. Perhaps giving CSX a closer look would be a wise idea since Berkshire and Buffett aren’t the biggest fans of bidding wars, especially in a somewhat pricier market environment.
In any case, CN Rail has a strong balance sheet, which gives it plenty of options. Add the 2.5% dividend yield into the equation and the lagging railway stock looks like a deep value buy right now.