May 12, 2015

On Tuesday the S&P 500 fell 0.3% and Toronto was down 0.7%.

But oil (West Texas Intermediate on the futures market) rose around 1.5% today and is currently up another 0.45% this evening to $61.20.

Melcor reported earnings after the close and everything looked quite positive with increases in revenues and profits versus last year. Given that and given that oil has recovered considerably from the lows it seems to me that there is ample reason for the stock to rise. But sometimes it seems like “the market” wants to focus on the negative. In terms of negatives Melcor sold less lots that the year ago quarter (albeit at higher prices) and the company mentioned that it is proceeding cautiously on some of its projects. Overall, I certainly found that the report reinforces my view that the stock is significantly under-valued. We shall see how the market reacts. The stock continues to be very thinly traded and basically just not well known and this hampers the valuation. That can be considered a negative. But it can also be considered an opportunity to buy at an excellent value. Certainly the stock could always go lower if the Alberta outlook dims but I feel good about my investment in this company.