The train derailment in Quebec is obviously very tragic. It seems clear that dozens were killed. (I find it strange that there were no reports of anyone escaping burning buildings with or without injury. It appears that anyone in the burned buildings had no chance. Hopefully most of those were commercial buildings unoccupied at night but apparently there was at least one night club.)
This will be a big deal for the rail industry. I would expect new safety requirements and possibly restrictions on shipping crude oil by rail. This would seem to bolster the arguments for the proposed pipelines.
It may be crass to mention it but I imagine that rail stocks could decline at the open tomorrow morning. The train that derailed was owned by a small private company. But I imagine that there are some negative implications for all rail companies. The only one I have analyzed is CN. Certainly if it happens to fall to $90, I would be a buyer. Perhaps its more likely to decline just a few dollars in which case I would not likely be a buyer.
Costco is updated and rated Weak Buy / Hold at $112. This is a wonderful business. It’s a simple and predictable business with strong competitive advantages that is almost certain to increase its earnings per share for many years to come. I would like to report that it is a Buy but seems somewhat too expensive. A possible strategy would be to take a small position and then hope to buy additional shares at a lower price. Or just wait and see if there comes an opportunity to buy in at a lower price.
It would be tempting and not difficult to “torture” the numbers until they confessed that this is a Buy. This could be done simply by assuming that the P/E will stay at 24. In which case the shares will rise with earnings and its seems clear the earnings will rise. But assuming the P/E will stay at 24 would be aggressive. It is reasonable to pay a higher P/E ratio for a high quality and growing company like Costco. But a P/E of 24 is difficult to justify. At this price it’s unlikely to be a terrible investment if held for five years or so but also perhaps not that likely to be a great investment.