Wednesday was a mostly positive day in the markets with the S&P 500 up 0.8% and Toronto up 0.3%.
Shopify surged 6.6%.
RioCan was up 2.2%.
Linamar was down 2.3% and is very close to its 52 week low. Fears of continued trade wars and slower auto sales weigh this stock down. It’s hard to believe that its trailing P/E is 5.0. Even harder to believe is its forward P/E which according to Yahoo Finance is 4.7. The forward earnings estimate could very well be too high (i.e. forward P/E could be unrealistically low) as earnings could certainly decline. But in any case it appears to be very cheap. But it seems that cheap stocks can always get cheaper with bad news. Even when the bad news is seemingly already more than “fully priced in” stocks can fall when bad news arrives or is predicted to worse.
I notice that about 25% of the votes were “withheld” from each of Linamar’s six directors. (The range was 23% to 30%). That is big withhold rate. I am not familiar with the reasons. Linamar has a very small Board and with two members of the founding and controlling family on the Board and one executive on the Board this Board would lack the independence that is valued by corporate governance experts. I am not aware of any criticism of how the company is being run so I am surprised at the large number of votes withheld. It’s a slap in the face. But a google search reveals that Linamar has had a long history of poor voting results. At times more than half the votes were withheld. Overall, the voting result then is nothing new and I don’t think it is cause for concern.
Linamar had bought back a small amount of shares in March. There were no buy backs in April. But in May, Linamar bought back about $5 million worth of shares at prices from $47 to $43. It appears that the company does believe its share are under valued.
Costco reported May sales after the close. Same store sales were up 4.3%. That’s a respectable gain but less than the stellar numbers it has been achieving for most of the last two years or so.
Today, I attended the annual meeting of Ceapro which is the one penny stock on our list. It was a worthwhile meeting. There was a good turn out. There was a lengthy presentation by management and questions were encouraged and detailed answers were given. This company has a number of initiatives that could transform the company’s fortunes. I don’t know enough at all about the science to judge how likely they are to succeed. But management certainly seems sincerely optimistic. I consider this stock to be very speculative. But I added to my small position today.