Canadian Pacific – Update Number 4

Our last post on Canadian Pacific was on March 1, so we thought we check in on CP in terms of our model price chart.

First let’s look at the Model Price Chart as at March 1, blog.

Canadian Pacific with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Here is the updated Model Price Chart as of last night:

Canadian Pacific with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of CP subsequent to this post will be maintained on Facebook, here.

Here is what we wrote on March 1, blog:

As we can see from the chart nothing much has happened in terms of price.  What is interesting is where the market price of CP has come to rest.  The market price of CP is using EBV+4 as support.  This will probably be the case up until the shareholder vote on May 17, 2012.  Remember EBV lines are calculated from the balance sheet.  Also, note the volatility of the market price.  When market prices on stocks, in general, use EBV lines for support stock volatility drops substantially.

So, May 17 is just around the corner and it looks like Ackman will win his proxy fight.  This will be a large rebuff to the Canadian business establishment.  As we wrote in our first blog about the company, Canadian Pacific is an underperforming outlier compared to the rest of the industry and in need of a shake-up.

In terms of price performance, as the reader can see on the above Model Price chart, CP is fully priced at these levels.  Other than the change of actors on the board, and Hunter Harrison back as CEO, we wouldn’t expect any large improvement in the share price anytime soon.  However a dip in the stock price back to EBV+3 would be an interesting situation for investors we would predict.

Other posts

Canadian Pacific – Update Number 3

Canadian Pacific – Time to let the stock go?

Canadian Pacific – Ackman wanting to shake up CP, Why?

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