Canadian Pacific Railway (NYSE:CP) stock has been rising since Russia invaded Ukraine. CP stock was due to open March 11 at $77.79, up from below $69 at the start of the month. They’re now up 8% so far this year.

Canadian Pacific investors have been hoping for gains ever since the company announced its deal to buy the Kansas City Southern line last September. That deal ended a six-month pursuit, which also included the rival Canadian National Railway (NYSE:CNI), whose effort to top CP’s bid was denied by a court.

Now both Canadian railroads are rising, as Canadian grain and national resources are seen as much more valuable in the wake of the Russian invasion.

Canadian Benefits

Canadian Pacific pursued Kansas City Southern believing that the American railroad would boost its profits.

William Ackman of Pershing Square saw it that way. He put $1 billion into Canadian Pacific stock near the end of last year.

It was Ackman’s second foray into CP stock. During the last decade, he won a proxy fight and replaced CP’s CEO, exiting in 2016. This time the purchase was friendly, supporting the Kansas City Southern merger and expressing regret that he had ever sold. Over the last five years CP stock is up 163% and its dividend has doubled.

Much of that capital gain, however, has come in just the last year, first as it pursued the merger and now as investors have sought safety during wartime. American railroad stocks like Norfolk Southern (NYSE:NSC) have been beating the S&P averages over the last year, as inflation has risen and the efficiency of railroads for moving freight has looked more attractive. But it’s stock in the two Canadian roads have done best.

Canadian Backlash

Not everyone is happy, however.

The International Brotherhood of Teamsters in Canada have voted to go on strike against Canadian Pacific on March 16, seeking higher wages and benefits.

U.S. regulators have yet to approve the merger. That’s still expected later this year 

But the strike adds pressure on CP to sell its Kansas City Speedway line through Missouri to Canadian National to get the deal over the line. Canadian National argues that getting the line would increase competition. American fertilizer and grain companies have joined in its call, the former concerned with freight rates and the latter with CP possibly preferring Canadian grain.

By the Numbers

Absent world tensions, Canadian Pacific isn’t a great stock.

Revenue grew just 3.7% in 2021, although profits rose 16% to $2.85 billion, $4.20 per share.  Entering trade on March 11 Canadian Pacific had a market cap of $72.8 billion, and a price to earnings ratio of 23.7. The dividend, usually a draw for railroad stocks, now yields just .8%.

It’s anticipation of safe and rising returns that has 10 of 13 analysts at Tipranks rating CP stock a buy. Their average price target is just 9% ahead of where it’s currently trading.

The Bottom Line on CP Stock

Canadian Pacific sought Kansas City Southern for diversification.

Turns out Canada was the better bet.

As the world isolates Russia, Canada is the best alternative for what Russia offers. Canadian Pacific and Canadian National represent low-cost methods for moving these goods to world markets.

As Kansas City Southern is integrated into the Canadian Pacific system, there should be benefits from cross-border trade. But these look to be marginal, compared with those that come from exposure to the Canadian economy.

The Canadian dollar, which was worth just 70 cents back when the pandemic started, is now worth nearly 80 cents. That’s the trade you’re making when you buy CP stock.

On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.