Downton Abbey And Canadian National Railway

| About: Canadian National (CNI)

Lord Grantham learned the hard way. That doesn't mean we have to.

Lord Grantham is, of course, the dignified but slightly befuddled head of the family that has owned the Downton Abbey estate for hundreds of years.

Grantham lost his wife's fortune by investing it all in a Canadian railroad stock that crumbled once the founder died. Not cricket.

The fans of this hit show on PBS are often disappointed to learn that Downtown Abbey does not really exist in the real world.

But the big mistake he made with his wife's fortune certainly does: I see it all the time in the hundreds of portfolios that I look at every year. They have a lack of diversification.

Maybe it is an employee of Cisco (NASDAQ:CSCO), for example, who had all his money tied up in their stock. Maybe it is an Apple (NASDAQ:AAPL) lover who just cannot part with AAPL, no matter what the stock does. In fact, in my practice I have encountered two investors that had all of their money in Apple. It may also be an inheritance or just a can't-miss hunch.

And now, as the market is getting better, that instinct is getting worse.

A lot more stocks are going up than going down. And some folks are starting to feel a bit cocky with their new secret strategy to beat the game: All their eggs in one basket.

There is no secret way to beat the game. No inside information from your cousin that is going to carry your portfolio to earn 25 percent a year while the rest of us shoot for 10.

There is just no other way to invest in equities other than fill your basket with a collection of good stocks and keep an eye on them.

Don't fall in love, not even with Apple. And don't expect a loser to turn into a winner, like NetFlix (NASDAQ:NFLX) recently did in a well noted rebound.

I like to look --- no, I demand to see -- three things in a stock before I add it to my basket of 25 or so stocks: Value, performance and a good, healthy stock chart. Of the 3217 stocks and investments out there I watch on my Best Stocks Now app, we have a lot to choose from.

Let's stay with Lord Grantham: He had the right idea. One of my Best Stocks Now is the Canadian National Railway Company (NYSE:CNI).

This company has a 41.9 billion market cap, and is performing very well for a company its size.

Data from Best Stocks Now app

Over the last 10, 5, and 1 and one years, the stock has beaten the S&P 500 quite handily:

Data from Best Stocks Now app

The stock also held up quite well in 2008 and along with the Transportation Sector is fast out of the gate so far in 2013.

The shares have a forward PE ratio of 14.2 and earnings are projected to grow by 11.4% percent per year. While not cheap, it is still reasonably priced.

The stock is trading at $97, and my current five-year valuation is $162. The stock still has considerable upside potential.

Data from Best Stocks Now app

And in case anyone has yet to notice, the Canadian economy is doing just fine, thank you. Only they are too polite to rub our faces in their energy-exploring, low capital gains, high employment economy.

So if you are looking for a rock-ribbed company that takes care of business in good times and bad, take a look at Canadian Railway, CNI. I have made it a part of my Conservative Growth model portfolio,along with 24 or so other good performers.

Lord Grantham would do well to consider next time his wife comes into a windfall fortune. The Dowager will be so happy.

Out of the 3,257 stocks that I follow, CNI comes in at #89.

Data from Best Stocks Now app

Disclosure: I am long CNI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.