Canadian Pacific Railway Ltd: Upcoming 5-for-1 Stock Split

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Canadian railroad Canadian Pacific(CP) has seen its stock soar in the past five years by over 157% based on just price growth (excluding dividends). The NYSE-listed stock closed at over $371.00 today. With most of the major railroad stocks trading in triple digit dollar range, CP decided to split the stock.

Last week Canadian Pacific announced a 5-for-1 stock split. The Ex-date for the split is May 4, 2021 and the stock will trade on split-adjusted basis from May 14, 2021. Based on today’s close, the split should bring the price to around $75 per share. Lower stock prices generally attract more retail investors. So split could bring more investors to CP.

Last month CP agreed to buy Kansas City Southern (KSU) to create the first North American network that connects Canada, USA and Mexico. However rival Canadian National made a $30 billion bid topping CP’s offer. It remains to be seen who will emerge victorious in this battle of the big railroads.

The five-return comparison of major North American Class I railroad stocks are shown below:

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Source: Yahoo Finance

Disclosure: Long CNI, CSX, UNP and NSC

 

Average Annual Return of Individual Investors vs. S&P 500 From 2009 To 2019: Chart

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The average individual investor in equity markets earns less than the market return. This has been confirmed by many studies. The reason for the difference is that individual investors are affected by many human behavioral issues such as trying to time the market, excessive trading, buying high and selling low, panicking during market corrections, etc. Hence their returns are lesser than the market. For instance, from 2009 to 2019 the average annualized return on the S&P 500 was 13.6%. But the average annual return earned by individual investor was just 9.4% according to study by Dalbar. That is an astonishing gap of 4.2%.

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Source: Dalbar via Bourbon Financial Management

Related ETF:

  •  SPDR S&P 500 ETF Trust (SPY)

Disclosure: No Positions

The World’s Busiest Airports in 2020

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The Covid Pandemic re-arranged the world’s busiest airport rankings for the first time in decades. The Guangzhou Bai Yun International Airport in China was the world’s busiest aiport in terms of passenger traffic in 2020. The traditional winner, Atlanta’s Hartsfield-Jackson Atlanta International Airport was unseated from the top position for the first time in 20 years to rank at number two.

Since China quashed the virus better than any other country in the world including the developed world, air travel there swiftly recovered. Accordingly 7 of the top 10 busiest airports last year were in China as shown in the chart below.

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Airport Codes:

1. Guangzhou (CAN)
2. Atlanta (ATL) 
3. Chengdu (CTU)
4. Dallas/Fort Worth (DFW) 
5. Shenzhen (SZX)
6. Beijing (PEK)
7. Denver (DEN)
8. Kunming (KMG)
9. Shanghai (SHA)
10. Xi’an (XIY)

Source: COVID pandemic reshuffles list of busiest airports, DW

Knowledge is Power: International Stocks, Dividend Stocks, Cognitive Bias Edition

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US stocks are performing well so far this year. Unlike last year value stocks such as utilities are increasing. Despite the hype of the “Roaring 20s” style recovery caution is warranted. For example, millions of people are not waiting to jump on a ship or a so called “petri dish” of covid last year. Similarly people can only eat so many times in restaurants. Its not like most Americans are going to go out every day for every meal and eat in restaurants. The astonishing growth in restaurant stocks since early last year seems to reflect this scenario. Besides most of the food sold by fast food joints and restaurant chains are not healthy anyway. So on top of the “pandemic pounds” people have gained it is not exactly rocket science to think that people will crowd the restaurants like there is no tomorrow.

From potential rise in interest rates to rising inflation risks are far higher this year to the equity market than last year. Companies such as P&G have announced coming price increases. Prices of gasoline, food, essentials, etc. have already increased. With that said, below are some interesting reads:

Moscow, Russia

The Average Hourly Labor Costs Across the European Union: Chart

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The Average Hourly Labor Costs Across the European Union is shown in the chart below. The highest hourly wage is in Denmark at €45.80. The lowest hourly wage is in Bulgaria at €6.50. The next two lowest hourly wage countries Hungary and Romania.

As expected the hourly wage in East European countries are much lower than in Western Europe. For example, a factory in Germany may have to pay €36.60 while across the border in Poland it needs to pay just € 11.0. The cost savings are indeed quite high.

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Source: RFE/RL Infographics

In the US, the Federal minimum wage is $7.25 per hour. However most states have their own minimum wage laws. Many US firms especially in the manufacturing industry save substantial labor costs by their production facilities to Mexico where the minimum Federal wage is just 141.70 pesos per day or about $7.08 per day.