The Gordie Howe International Bridge is about to reshape a busy trade corridor, and with it, the prospects for several stocks exposed to cross border transportation and infrastructure activity. With a US$4.5b project now cleared to open on July 27 and a 15 year economic development fund tied to bridge profits, capital and freight flows are set to be rerouted and expanded across this US Canada link. This article walks through three stocks from our Cross Border Trade and Infrastructure Expansion Stock Opportunities screener that may be positioned to benefit from this shift.

Canadian Pacific Kansas City (TSX:CP)

Overview: Canadian Pacific Kansas City operates a 20,000 mile freight rail network linking Canada, the US and Mexico, moving grain, coal, potash, fuel, industrial products, consumer goods and retail containers across the continent.

Operations: The company currently generates all of its CA$15.0b revenue from rail transportation services.

Market Cap: CA$113.3b

Canadian Pacific Kansas City gives investors direct exposure to cross border freight at a time when the Gordie Howe International Bridge is set to expand US Canada trade flows that already carry nearly $70b in goods each year. The company combines high quality earnings, with net margins around 27%, and a unified three country rail network. This is balanced by a relatively high P/E multiple and a sizeable debt load. Record grain volumes and active investment in new capacity, such as the Laredo bridge expansion, indicate the potential for operating leverage. At the same time, insider selling and modest forecast returns on equity mean investors may wish to weigh pricing power and growth potential against balance sheet and governance risks.

Canadian Pacific Kansas City’s unified three country rail network and 27% net margins could be masking a very different story. Unpack the 3 key rewards and 2 important warning signs

Canadian National Railway (TSX:CNR)

Overview: Canadian National Railway is a freight transportation company that runs a large rail network across Canada and the United States, moving everything from grain and potash to autos, consumer goods, chemicals and forest products, and tying in trucking, intermodal and logistics services for end to end supply chains.

Operations: Canadian National Railway generates CA$17.28b in revenue from rail operations, with CA$12.14b coming from Canada and CA$5.14b from the United States.

Market Cap: CA$107.1b

Canadian National Railway sits at the heart of North American trade, and the Gordie Howe International Bridge could deepen that role by funnelling more cross border freight into its Windsor Detroit corridor. Investors get exposure to a wide moat rail network with high margins around 27%, a record of moving large grain volumes even in tough conditions, and new projects in potash, energy products and industrial sites that aim to keep the network busy. At the same time, the stock combines a premium network with meaningful debt and earnings growth that some forecasts see as only moderate. Any case for CNR rests on how you weigh its long lived infrastructure, cross border positioning and governance strengths against leverage and a slower growth profile.

Canadian National Railway’s wide moat network and premium pricing suggest that the market may not be fully accounting for its staying power, even with only moderate earnings forecasts. See how the 5 key rewards and 1 important warning sign could change the risk reward picture.

Martin Marietta Materials (MLM)

Overview: Martin Marietta Materials is a natural resource based building materials company that supplies crushed stone, sand, gravel, ready mixed concrete, asphalt, paving services and magnesia based chemical products used in roads, bridges, industrial projects and construction across the United States and internationally.

Operations: Martin Marietta Materials generates most of its revenue from its Building Materials Business, with about US$3.3b from the East Group and US$2.8b from the West Group (including cement), alongside around US$497m from Specialties and a US$277m interproduct revenue offset.

Market Cap: US$34.7b

Martin Marietta Materials sits in the slipstream of projects like the Gordie Howe International Bridge, supplying the aggregates and heavy construction materials that large transport corridors and follow on industrial sites rely on. The planned US$13.5b Lhoist North America acquisition would significantly widen its lime and limestone footprint and add higher margin, more resilient cash flows. At the same time, investors are also looking at a premium valuation, high debt and only moderate current returns on equity, which raises questions about how smoothly the Lhoist deal and future infrastructure spending will translate into long term value. The key consideration is how this mix of growth projects and financial risk compares once you look under the hood.

Martin Marietta Materials’ premium pricing and high debt suggest the real story sits in the details. Read the 3 key rewards and 1 important warning sign to see whether the Lhoist deal is a springboard or something else entirely.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.