Tuesday was a down day in the markets as the S&P 500 fell 1.2% and Toronto was down 1.3%.
With the economy softening, I would be inclined to hold more cash. But I always find it difficult to part with most of the stocks I own and so I have very little that I am willing to sell. Therefore I will likely keep holding and will look to deploy my small cash position slowly if and as bargains arise.
Linamar was down 4.0%. This company faces slower auto sales and also trade issues on auto parts. In addition its agricultural division is suffering as farmers delay spending due to tariff issues. Despite being very cheap in relation to earnings it seems that this stock could certainly go lower before ultimately recovering. Yahoo Finance shows it as trading at 5.26 times trailing earnings and basically the same at 5.25 times forward earnings. That implies that analysts expect earnings to be unchanged in the next year or so. But if that were true, which should it trade at such a low multiple? Perhaps more likely, earnings will decline in the next year. But the company seems confident that it will ultimately continue to grow.