On Friday, the S&P 500 was up 0.1% and Toronto was up 0.4%.
Gaining stocks included BHP Billiton – up 2.6%, toll Brothers – up 1.8% and Linamar – up 2.0%.
Aecon Group was down 2.6%.
Canadian Western Bank is set to report earnings on Wednesday. In general, I expect continued growth. There is always a risk that they will report higher loan losses as some of the larger banks have done this month. CWB has a reputation of prudent lending. It also has a different loan customer mix compared to the larger Canadian banks. I am not expecting any big changes to loan losses. CWB’s stock is cheap in relation to its earnings and book value. It’s been weighed down by negative sentiment towards Alberta even though the percentage of its business in Alberta has been declining. CWB is also working on getting regulatory approval to move to a more sophisticated way of calculating its risk-weighted assets. This will allow it to add leverage to certain of its loan categories similar to the big banks. This should allow it to increase its ROE. However it’s a long process. After a number of years of preparation and testing of software, they plan to apply by October to be allowed to use the advanced calculation method. I don’t think they have ever said how long the approval process would take. Perhaps they will update the status in this Q2 report. When the implementation of the new method starts to come into sight (for example used in analyst forecast earnings models) then perhaps the stock will get a boost from that. I believe CWB has also been buying back shares in May. They may report on that on May 29 or they may wait until early June and report that separately.
Go Raptors! Hopefully the Raptors’ success has brought in more customers to Boston Pizza’s sports bars. More importantly, their success is a nice boost for Toronto and Canada.