November 8, 2017

On Wednesday, the S&P 500 was up 0.1% while Toronto was down 0.2%.

Stocks that rose today included Stantec, up 1.0%, Couche-Tard up 1.7%, Costco, up 1.7%, and Toll Brothers up 1.5%.

Spoiling the day, was Linamar down almost 14%. The company claimed that earnings were up 9.4% on an adjusted basis but it seems the market decided to focus on the drop in the actual GAAP earnings. Our graph for Linamar shows that it seldom claims much of an adjustment for earnings and on that basis perhaps its claim this time should be given the benefit of the doubt. But they got the 9.4% in part by now claiming that the year ago quarter should be adjusted down, something they did not reveal at that time. Analysts don’t take kindly to retroactive adjustments like that.

The decline in the price here would seem to be a buying opportunity but as noted in our last update, there are risks regarding NAFTA. The stock looks cheap on a P./E basis but this is an industry that is known to be cyclical.