Company info: it is the largest rail network in Canada (over 20,000 route miles) crosses the continent east-west and north-south, serving ports on the Atlantic, Pacific and Gulf coasts while linking customers to all three NAFTA nations. Goods moving includes petroeum & chemicals, matals & minerals, forest products, coal, grain & fertilizers, intermodal and automative.

Financial data: 9% revenue growth in past 3 yr; P/E ratio 14.2 and PEG 1.1, 06 return on equity 21.9%; debt equity ratio 0.57.

Sector info: 1) railway is a high boundary entry sector, with high initial capital contribution, so it has little competition within the sector (there are only 2 railway company in Canada, CNR is the largest one). 2) They do have competition with trucks, trucks has more flexibility in deliverable network, but on the other hand, railway is less affected by oil price, better management on the entire rail network due to lesser traffic jam and the network is under controlled by a central system.

Outlook: 1) High demand of resource from China & Southeast Asia plus the estimate Canada GDP will remain strong, railway business should be great in the coming year. 2) It plans to repurchase 5M shares in 2008, equal to more than 15% of total share outstanding. This is good, it will increase EPS by 18% and reduce forward P/E ratio.

Risk: 1) the coming winter is cold, snow storm will affect the railway network's safty and delay the delivery time; 2) potential strike happen all the time for this company. 3) automative business are in dangerous situation in Canada due to oil price & high Canadian dollar may affect CN's business.

Conclusion: target price $60; current price $51; i don't think the price will rise dramically during winter, investors are waiting for its 4Q results (will publish on Feb/Mar 08.)

I do not hold any CN's shares.