Melcor Developments updated November 29, 2018

The report for Melcor Developments is updated and rated (higher) Strong Buy at $12.75 based on the fact that it trades at 42% of book value per share and based on the “hard” nature of its assets. This has obviously been a very frustrating stock to own since oil prices declined in 2014. Subsequently Alberta has been recovering from recession for several years. But the very recent oil price declines and in particular the discounts on Alberta oil have very much darkened the mood in Alberta. Experience teaches that cheap stocks can also get cheaper and that there are never any guarantees. But based on the numbers and assuming Alberta is not in a permanent decline, my methods rate this stock highly. But continued patience is likely to be required. I expect that they will sell fewer lots in Q4 versus last year, perhaps far fewer.


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