May 25, 2021

On Tuesday, the S&P 500 was down 0.2% while Toronto was up 0.2%.

AutoCanada was up 3.2%.

Toll Brothers was up 2.4%. Then, after the close, it released what seems to be a blow-out earnings report. Profits and revenues were up sharply but that was based on home sale contracts signed some 9 to 12 months earlier and was expected. The better news if that new orders are containing at record levels. I would suspect that this report exceeded market expectations and that the stock will rise tomorrow. I was starting to worry that the price to book ratio at 1.7 might be getting high for a company that is so asset intensive. But they are projection a 20% return on equity in fiscal 2020. That kind of return can easily justify a higher price to book value ratio. This is a cyclical company and things can change fast. But for now the outlook looks very good.

My next update will be for lululemon. This has been a great Canadian success story. I looked at it years ago and under estimated it which was my mistake. I bought their pants when I should have also been buying their shares. I’m not sure about the valuation at this point and that is what I am going to analyse.


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