On Friday markets curbed their recent enthusiasm a bit as the S&P 500 was about unchanged on the day and Toronto was down 1.2%.
Costco was an exception as it gained another 4.45% after its earnings release and its announcement of a $15 special dividend. It’s definitely expensive at 45 times trailing earnings but betting against this power house usually turns out to be a bad idea.
Most stocks on our list were down modestly. Dollarama was down 3.1% to $90. It’s not cheap at 27 times trailing earnings although at Yahoo’s reported 20 times forward earnings it would not be expensive. Overall, this price might be an opportunity to nibble.
The market has been somewhat euphoric after indications from the FED that interest rates are likely to decline. Government Bond rates (yields) are already down a LOT. The 5 year Canada bond yield is at 3.27% and it was as high as about 4.45% in early October.
Looking forward, we should remember that markets can easily and instantly turn negative as events unfold. Therefore a balanced approach is usually a good idea. Trimming a little from equities to rebalance to a target percentage of safer investments is considered prudent.
CMHC has reported housing starts for November. For Canada they were down 20% versus the same month last year with single-family starts down 15%. But Alberta was a bright spot with overall starts up 29% year-over-year and single-family starts up 41%. Calgary was particularly strong. Alberta year-to-date starts are down 5% with single family starts down 14%. Overall it appears that Q4 will be reasonably strong for home starts in Alberta. This is positive news for Melcor Developments. Perhaps that stock can finally start to show some life by net Spring. It is however very thinly traded and the market does not pay it much attention. I just wrote a lengthy email to Melcor’s management yesterday outlining my concerns. I’m trying to put the wood to them. It can’t hurt to remind them that investors are not happy. They don’t hear from many investors at all.