December 12, 2019

Thursday was a strong day in the U.S. markets as Trump signed some kind of Phase I trade deal with China.

The S&P 500 was up 0.9% while Toronto was about unchanged.

Linamar benefited from the news on the trade file adn was up 4.8% to $48.24. That’s a big bounce back from lows of under $37 in early October. The stock remains far below its highs of 2014 and 2017. Yahoo Finance shows it is trading at only 6.7 times estimated forward earnings which is cheap. On the other hand I believe it will report quite weak numbers in Q4 due to a weaker auto parts industry and due to weak sales to agricultural customers. So, while it looks cheap we could be in for more whip-sawing of the price. Trump’s deal should improve the agricultural market and so perhaps a strong outlook will offset a weak Q4. FedEx was up 3.65% on the trade news. It reports earnings on Tuesday next week.

Canadian Western Bank was down 1.9%.

There was news today about a company that owns 58 buildings in Calgary (mostly office and some retail) seeking creditor protection. Buildings being sold in bankruptcy sales will no-doubt be a drag on commercial real estate values in Calgary. 

Toll Brothers was down 2.1%.

lululemon was down 3.7% despite posting strong earnings. It’s doing very well but the stock is very expensive in relation to earnings.

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