From the Desk of Irwin Michael – April 24, 2015

Over the past couple of weeks the market has remained volatile with greater than usual fluctuations in the equity indices and currency exchange rates. While some of the market variations were caused by speculation over China’s fiscal and monetary policy changes, the recent strength of the price of oil has also been a factor. Additionally, we are in the midst of the corporate earnings season, which is typically a speculative time for stocks. Nevertheless, we have maintained our strategy of picking companies with solid fundamentals, free cash flow, positive earnings growth, and good business prospects. Several of our recently purchased holdings that just reported quarterly results include:

Exco Technologies, which we have featured in previous writings, handily beat both its revenue and earnings estimates. We are pleased with its performance and continue to believe in its prospects. Exco is held in three ABC Funds: ABC Fully-Managed, ABC Fundamental-Value and the ABC Dirt-Cheap Stock Fund. The stock has appreciated around 14.5% since April 1.

Cheesecake Factory, the well-known U.S. based restaurant chain, has shown better than expected customer traffic and sales growth. We think there is strong momentum and management is doing a good job managing costs and expanding with new restaurants to further revenue growth. Cheesecake is held in two ABC Funds: ABC Fully-Managed and ABC North-American Deep-Value Fund and has improved over 7% since early April.

Flexsteel Industries, a small capitalization, American-based manufacturer of wood furniture announced an extremely strong first quarter sales number, increasing margins and lower selling, general and administrative expenses. With a strong order backlog and continued positive trends, the shares have increased almost 15% since the beginning of April. Flexsteel is held in the ABC American-Value and ABC North American Deep-Value Fund.

April has been an extremely busy month for corporate earnings with more reports to come. Overall, we remain very committed in our continuous search for fundamentally attractive, free cash flowing additions to our ABC funds.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

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