October 20, 2014 Comments

On Monday the S&P was up 0.9% and Toronto was up 0.8%. The S&P rose despite IBM reporting a big loss.

I read the Wells Fargo Q3 report (from last week) and this bank is still growing strongly in almost all of its business lines. Its net interest margin however is continuing to decline as older higher interest rate loans roll over to new lower interest rates loan. Overall it looks like a good long term investment.

Toll Brothers was up 1.3% today to $31.64. It appears that its recent trip down to under $30 was a good buying opportunity. I think it is a good investment that has the potential to be be over $40 or higher in the next year. That is not to say it can’t decline. It would if the U.S. housing recovery stalls.

Melcor was about flat today. I continue to think it will be a good investment. It’s trading around book value. There is lots of upside potential and it I think would take quite a sharp decline in the Alberta economy to cause this to be a poor investment for a holding period of at least several years. In other words it seems to me that there is some margin of safety here on a balance sheet basis.

Costco was up 3.0%. I have been waiting for a bigger dip before I would buy but the experience seems to be that this stock has not offered big dips. It’s a case where it might be worth paying a high multiple on earnings due to the high quality of the company.

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