On Thursday, the S&P 500 was down 0.25%, giving back a bit of yesterday’s gains. Toronto was down 0.1%.
Melcor was down 4.3% to $13.40. That puts it at 44% of book value. Unfortunately, the wait for a recovery here continues. CMHC reported today that single family housing starts were down 30% in Alberta this October versus October of 2017. So that does not bode well for Q4 although, I don’t know the timing between lot sales to home builders and actual housing starts. Q4 is normally Melcor’s biggest quarter for lot sales. Q4 2017 was a strong quarter and so it seems likely that earnings will be lower in Q4 ’18. But they will almost certainly still be positive. Melcor bought additional land in Q3 which is an indication of their confidence. Melcor is a conservative company with a strong balance sheet. Melcor also bought 2 office buildings in Glendale Arizona as they continue to diversify.
Toll Brothers was down 3.15%. In general, the markets have bid down the price of home building related stocks.
TFI International was down 3.7% to $43.69 but remains up 32% this year to date.
Linamar got crushed down 7.3% today to $49.79 after reporting a modest rise in profits in Q3. The stock trades at 5.5 times trailing earnings which would suggest an expectation that profits will decline. Yet the CEO is quite optimistic that earnings will once again improve in 2019. It occurs to me that because Linamar has not issued any shares in at least ten years and because it mostly borrows from banks rather than issuing bonds, the analyst community (who mostly work for the investment banks that earn fees when companies issue shares and bonds) owes it (and does it) no favors.
Meanwhile, Canadian Tire was up 10.8% after reporting earnings and raising its dividend.
After the close, AutoCanada reported earnings. Its sales figures showed a small improvement but it posted a loss due to increased expenses. The company updated its turn around plans and is optimistic about improvements in 2019 despite expectations of a weak auto market.