January 3, 2018

Markets were up fairly strongly again today. The S&P 500 was up % and Toronto was up 0.4%.

Toll Brothers was up 4.3% to $50.42.

TFI Industries was up 3.2%.

I don’t know any specific reason for these two rising today. But I do know that, like virtually all of the companies on our list they are profitable companies that rise in value over time based on profitable sales to their customers.

Meanwhile four Cannabis stocks that I am keeping an eye on (but have absolutely no plans to invest in) were up an average of another 12.1% each today. Wonderful for those holding or who sold today.

The valuation of these four companies is as follows:

Aurora $6.5 billion

Medreleaf $2.8 billion

Aphria $3.3 billion

Canopy Growth $6.9 billion

Total $19.9 billion.

I have no idea at all what the profits and sales of these companies will be. Do the buyers of these stocks?

I do know that $6.5 billion is a LOT of money. By comparison some companies that I follow have market caps as follows:

Canadian Western Bank $3.5 billion.

Stantec $4.0 billion

Toll Brothers $8.2 billion U.S. ($10.3 Canadian)

Dollarama $18.0 billion

Linamar $4.8 billion

TFI International $3.0 billion.

To me, it seems a bit much that, for example, Canopy Growth and Aurora Cannabis are each worth far more than the likes of Stantec, TFI, Linamar and Canadian Western Bank.

Again, I have absolutely no idea of the profits that these companies stand to make. Predictions are that some of these Canadian companies will become world leaders in this new business. Maybe so, but if I held these I would be worried that the valuation is not anchored to much of anything concrete. The very lack of anchoring has allowed the valuation to sail ever higher. But on what basis?

Should those who hold these stocks consider locking in at least some of their gains? Should they ponder the old advice to be cautious when others are greedy?

Or are these shares destined to climb higher as various mutual funds may now be buying so as not to be left out of this exciting investment?

In any case it seems that markets continue to be anything but boring.

Meanwhile, oil (West Texas) is at $61.78. Perhaps Melcor and some other Alberta-based stocks will benefit from that.