September 3, 2014 Comments

On Wednesday the S&P 500 was down less than 0.1% and Toronto was up 0.25%

Toll Brothers was down 4.7% to $33.95 after it reported earnings this morning. This was a case where a year over year earnings increase of 110% and revenue increase of 53% was just not enough. The concern is that the sales were a little weaker than its pervious quarter although much better than the year ago quarter. Management appears to believe that the housing recover continues but is “bumpy”. They believe that the pace of new building should be 50% higher to reflect population growth.

Basically this is a bet that the housing recovery will continue in the U.S. In the past the stock has been pricing in a continued rapid increase in earnings. In the past year the stock price has bounced around but is relatively unchanged from October 2013. Meanwhile the earnings are up strongly and so the P/E ratio has started to look more reasonable although it is still somewhere around 24.

I continue to think it will be a good long-term investment and added to my position today at $34.10.

Liquor Stores N.A. was up another 4.4% today.

Couche-Tard was up 6.7% after reporting another strong quarter. It’s a case of a very strong and superbly managed company that has usually looked expensive but that has continued to out perform.