Friday continued a pattern of one day up and next day down for the markets. Friday’s turn was down.
The S&P 500 was down 1.1% and Toronto was down 0.8%.
AutoCanada was down 3.9% to $18.69. There are certainly some headwinds as mentioned in my recent updated report for this company. These include higher interest rate which negatively affect the company as well as potential vehicle buyers. And a possible recession is another headwind. But current management who took over this company about 5 years ago have proven to be able to manage through very hard times (The 2020 panic caused by the pandemic) and have grown revenues and profitability considerably. They brought the company back from big losses caused by the prior incompetent management. National Bank recently reduced its target price to $27 but did question whether investors need to be exposed to a consumer discretionary business at this time. Overall, I’m surprised how far the stock has been pushed down. I bought a few more shares yesterday. Earnings are expected to be lower this year but the company appears to be under-valued. This has been a very volatile stock over the years and that could certainly continue to be the case.
With oil prices down I also bought a small amount of the energy exchange traded fund XEG. This is an inherently volatile investment as oil and natural gas prices fluctuate.
Overall, there are lots of uncertainties in the market and with cash now paying about 4%, it is not a bad idea at all to maintain a material allocation to cash and near cash assets. It’s true that this 4% is lower than inflation but inflation affects every investment.