January 20, 2015 Comments

On Tuesday, the S&P 500 was up 0.1% and Toronto was about unchanged.

Agrium was up an impressive 4.5% to $124.22. The only news that I see is that a former Board member with apparently very good credentials is returning to the Board after an offer for a CEO job at a a commodities company fell through.

Canadian Tire was down 2.3%. Possibly the market is starting to worry what the lower Canadian dollar is going to do this company which imports most of its merchandise.

Bombardier’s common shares managed a 3.2% gain today but that is not much given its recent slide. At this point is should be considered highly speculative.

The Bombardier preferred shares that I have on the list (They have other pref shares as well) were down another 4.7% today to $15.49. In what is perhaps a ray of hope this was however up from the day’s low of $13.60. I have updated the report and rated them highly speculative Buy at $2.80. I hold these shares and did not sell. However at this point anyone buying should probably be buying on speculation of a recovery in the price rather than based on the yield. I would think if the price does not recover it will be for reasons that would also potentially affect the dividend.

I am certainly hoping that the decline in price here was over-done. I knew Bombardier’s finances were weak but they still don’t look to me like they are in much danger of going under. They appear to have sufficient cash for this year. I listened to part of a conference call from a few days ago and did not get the sense that the analysts were expecting the company to run out of cash. It seems to me that if cash got really tight then they could curtail some production and curtail some capital spending and let cash from sales build up. The stronger U.S. economy should be beneficial as should the lower Canadian dollar.

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