May 17, 2019

Thursday’s markets saw the S&P 500 down 0.1% while Toronto was up 0.2%.

I did end up buying back half of the portion of my Linamar shares that had sold on May 10 at $74.90. I paid $70.32. I was tempted to wait ans see if Linamar drops again which could happen if there is an announcement that the NAFTA negotiations are put on hold or any negative development on NAFTA. But looked at my strong buy rating and decided to buy back half of what had sold.

Toll Brothers rose 1.7% to $42.40. My last rating was (higher) Buy at $43.91.

Toll Brothers will report fiscal Q2 earnings on May 25. My expectation is that profits will have risen something in the order of 25% (barring unusual items) based on delivering homes contracted about a year earlier. There should also be a boost from lower income taxes. The recently higher U.S. lumber prices could mean that profits don’t rise as much as expected. That is a negative. But the higher lumber prices are caused by not only higher Trump import tariffs but also by high demand. A high demand for houses is clearly positive for Toll Brothers. I suspect they will report a good increase in homes contracted for this quarter. We shall see on the 25th. The company itself had bought back shares aggressively in Q1 at an average of $47.40. That’s a positive indicator because this company has been very astute in the past regarding buy backs. They have some history of doing so at good prices.