Markets were up sharply on Friday as the U.S. jobs report came in strong. The S&P 500 was up 1.0% and Toronto was up 0.7%.
Notable gains included FedEx and Toll Brothers each up 2.5%.
Apple was up 2.8%.
SNC Lavalin (not on our list but one I follow) was up another 4.6%. Its future depends to a good extent on how aggressively it is going to be chased through the courts by the Canadian government and also by sort of ambulance-chasing lawyers who will sue on behalf of shareholders who lost money on the stock . That’s a despicable process because it ultimately results in long-time shareholders (who also suffered the declines) suffering as the company is forced top pay money to a smaller group of usually transient shareholders and to the ambulance-chasing lawyers. Companies do not truly commit crimes, people do. I would rather see any guilty executives and board members chased through the courts instead.
Aecon Group was up 4%.
Stantec will report earnings Wednesday afternoon. I am hoping for significantly better results there. They divested their problematic construction services division late last year. The market was quite disappointed last quarter that Stantec was unable reduce certain costs and post better profits. Stantec has been quite deservedly “in the penalty box”. Management needs to prove they are capable of showing much better results.
Melcor Developments will report earnings on Wednesday afternoon as well. Given the good results from the Melcor REIT, (see post below) I am more confident that Melcor will report positive earnings. But it will almost certainly be a decrease in earnings and funds from operation given that Q3 2018 was a relatively strong quarter. Book value per share which is over $31 will likely be little changed and remains far higher than the market price. Based on the REIT report I am not expecting any material declines in market value on its investment rental buildings. It is always possible that they will need to write-down the value of some land holdings but there has been no indication of that happening. What may be most important is their outlook for future lot sales in Alberta as well as in the U.S. They curtailed their Alberta land development activities this year and so that likely guarantees lower lot sales in Alberta even if the demand were present ( and demand was likely weak). The stock looks attractive on a book value basis but it appears that it is in a low return business.