September 20, 2014 Comments

On Friday, the S&P 500 was flat but at one point during the day set another record high at 2019. Toronto fell 1.3%.

Wells Fargo hit a new high of $53.80 and closed at $53.36. My figures show that the P/E is 14.2, the price to book value is 1.8, the dividend yield is 2.6% and the ROE is 12.9%. While there are always risks in investing, the overall picture here is “what’s not to like?”.

Canadian Tire has been hitting new highs, I calculate its stats as P/E 16.3, price to book value 1.8, yield 1.7% and ROE 11.4%. Those stats are not as good looking as Wells Fargo but a P/E of 16.3 is still below that of the average stock.

Melcors earnings are volatile due to both its cyclic nature and accounting rules that mark it portfolio of rental properties to market as if they were investments in stocks. In that case I focus on the attractive price to book value of 1.0. I also consider that while Melcor’s reported earnings are volatile they have never been negative on an annual basis in the past ten years.

Overall, I am feeling quite good about how the markets and the economy has been doing. Things can change but at the moment I like how things have unfolded this year.