Stocks were hot on Thursday as the S&P 500 rose 1.0% and Toronto rose by 0.9%
Linamar was up 11.4%. Cameco was up 5.4%. Aecon Group was up 4.8%.
Constellation Software was up 4.5%.
One of the rate reset preferred shares on our list and that I keep an eye on is TD,PF.A . It has a low spread over the 5 year Canada bond of just 2.24% and is scheduled to reset on October 31. It was featured in my newsletter article on July 2, at $17.49. Now it’s at $23.07 for a gain of 32% (plus the dividend). Although I said it was a buy on July 2, that size of gain is NOT something I expected. At the start of this year it was at $18.35 and I rated it only a (lower) Buy. But I mentioned the possibility of it being redeemed at $25. That must be what the market is now expecting. This share is over-priced at $23.07 unless it is assumed that it will most likely be redeemed on October 31 at $25. TD has been issuing a lot of a certain type of bond (5 years but extendible to 10 at the bank’s option) this year, apparently aimed at retail investors. They have had those bonds as new issues many times in the past 8 months or more. It may be that those bonds will replace these rate reset shares in TD’s capital structure. TD has redeemed other rate reset shares in the recent past. But there is no guarantee that this one will be redeemed.
Canadian (and by province) building permit data for January and was strong whether compared to December (seasonally adjusted, as always) or compared to January last year. Alberta’s building permits were up 26% year-over year and single family home building permits were up 33%. This should bode well for Melcor Developments stock price and god knows it could use a reason to rise. Whether it’s builders took on a good number of lots in Q4 or not, (and at good prices) remains to be seen. What may be more important is if Melcor has good things to say about its outlook.
Ontario led the gains when comparing January to December, seasonally adjusted.