Canadian National Railway (CNI)

The western suburbs of Chicago are currently up in arms against Canadian National Railway because they are proposing to buy the EJ&E (Elgin Joliet and Eastern) railway, thus quadrupling the number of freight trains.

But, on a separate note, Forbes Magazine recommends the stock, which has Bill Gates as a major shareholder.

CNI has the rail industry's highest net profit margin (27%) and has shorter term freight contracts than other railroads - which allow it to raise prices.

Also, CNI's stock trades cheap - 12 times trailing earnings vs. 18 times for Burlington Northern Santa Fe (which Warren Buffett bought into recently) vs. 20 times for the industry average.

Finally, CNI is poised for growth because it has exclusive rail access to the new container terminal at the Port of Prince Rupert in British Columbia.  This terminal  should capture more freight traffic to Asia because it is 10 days to Shanghai vs. 12 days for the Port of  Los Angeles.