October 25, 2016

On Tuesday, the S&P 500 and Toronto were each down 0.4%.

CRH Medical was up 2.1% to $6.22 in Toronto and $4.75 in the U.S. (The report on this one is in U.S. dollars.)

Toll Brothers was down 1.9% to $28.22. I continue to think this company represents very good value. I expect the U.S. housing market to continue to improve with higher prices. Unemployment int he U.S. is 5% and that is down from 10% at the height of the financial crisis. There is a large cohort of young people that have delayed becoming first-time home buyers due to the bad taste left by the housing crash around 2008. Eventually those people will become comfortable with buying as they see U.S. home prices have risen a lot and will likely continue to rise. While interest rates are likely to rise it seems likely that they will still remain very low. Home affordability remains excellent in the U.S.

CN Rail reported slightly weaker earnings after the close, which was expected. I believe the results were better than expected in terms of earnings and the company have revised its guidance upward.I am not sure if the result was better or worse than expected. In my last update I focused on the weak near-term outlook while noting the company would still likely do well long term. It appears I should have focused more on that long term. CN has been a fabulous investment over the years albeit with some volatility. It provides an essential service and does so in a very efficient manner that allows high profits and reasonable shipping rates at the same time.