On Friday, the S&P 500 was up 0.6% and Toronto was up 0.1%.
Agrium was up 2.5% to $144.13. I have not looked at its numbers since early this year. I will likely remove it from the site rather than try to update it. It’s proposed merger with Potash corporation has made it harder to analyse. And its value will always depend on the prices of commodities, notably Potash. I would be inclined to sell or at least reduce my position if I still held it.
Toll Brothers was down 2.5%. This company has been increasing its earnings rapidly for the past five years (although with a pause in 2015). Meanwhile the price has been volatile and is no higher than it was four years ago. And, the price is well below the $40 level it reached in 2015. The P/E multiple and price to book multiple has fallen. “The market” does not give it much credit and seems to continue to fear a housing slowdown in the U.S. With a lack of investor excitement, the stock can still “pull itself up by its own bootstraps”. If it keeps on growing its earnings per share the stock price will ultimately rise as the multiples will not continue to go down indefinitely. If at some point, investors get excited about the stock then the price could rise rapidly.
On Friday, I sold the remainder of my TransForce shares at about $35. I have them rated as only a Weak Buy / Hold at $33.15 and I decided to convert this investment to cash to either hold as cash or use for a higher rated stock pick. It is a great company and I would not mind owning it again if the price dropped. It is hard to believe that this stock dipped to $20 in February.
I also sold a bit more of my Canadian Western Bank shares at $32.10. I had rated it only a Weak /Buy Hold at $29.51 partly because the company did not seem to be expecting much improvement in the next year. In any case I only sold shares that I had a profit on and expect to most likely keep a significant exposure to this bank. If I had not sold any shares recently it would now be almost 15% of my portfolio.
With the strong markets it seems like everything I have sold lately has been a mistake. But that remain to be seen over time. My cash position is still only 16% of my portfolio which is not excessive at a time when the U.S. market is at record highs. I am inclined to trim a few more positions and perhaps sell some lower-rated stocks especially in my registered portfolios where income tax is not triggered by selling. After that I will be looking to add to some higher rated stocks unless I already have a high allocation to them.
The average gain on the stocks rated (lower) Buy or higher from the start of 2016 is now 17.7%. And, only 4 of the 24 stocks are down, with the biggest decline being 7%. This is all excluding dividends. I’d be more than happy to reach the end of the calendar year with these figures intact. (The average for the four Strong Buys is 25.4%, led by TransForce at 49%)