November 14, 2017

Tuesday’s markets saw the S&P 500 down 0.2% and Toronto down 0.7% (as commodity prices fell).

Toll Brothers was up 2.2% to $47.05. It’s now up 52% this year to date. Our last rating was (higher) Buy at $42.81 on October 9th. The 10% price increase since then would likely be enough to reduce the rating to Buy or (lower) Buy if the report were to be updated.

Whether someone already holding this stock should add, hold or trim depends on more than just the rating. Such a decision would be influenced by the size of the position. I have a large position and would not consider adding more at this time. I trimmed this position to raise cash on October 17 at $43.10 which it seems fair to say was a prudent move but could now be viewed as a mistake. With a large position I think it is prudent for me to trim it somewhat and I may do so tomorrow. I hold some in RRSP and RESP accounts where triggering a capital gain is not a factor.

TFI International was down 3.1% to $30.76. Our last update rated it (higher) Buy at $27.50 back on May 21. This is a very well managed company and should continue to do well in the long term.

CRH Medical was down another 7.7%. Hopefully the stock is just being dumped by people who look only at price trends and not fundamentals. The company certainly claims that it still has a profitable operation and in fact that they are still growing by acquisition.  There is certainly a lot of uncertainty over how profitable it will be in 2018 under the new lower fee structure but I did not see any indication at all that it would not continue to be profitable and grow.

Boston Pizza released earning this morning that were neither particularly good nor bad. Same-store sales which is the absolute key driver of valuation were up only about 0.4%. Still, it is an increase and this entity that pays out about 100% of its distributable cash does not need much if any growth to justify the unit price.  Distributable cash per unit was up 3.5% but that appeared to be due to certain smaller items that are somewhat volatile. I would continue to consider these units to be worthy of a Buy rating and possibly it should be more like (higher) Buy.