There are no key Canadian or U.S. economic releases due out today.
Briefly recapping Friday's performance, it was a mixed day for North American equity markets, with U.S. indices rising and the Canadian benchmark falling.
In the U.S., the Dow Jones Industrial Average, the S&P 500 Index, and the Nasdaq composite all closed the day with gains, increasing 0.32 per cent, rising 0.35 per cent, and gaining 0.60 per cent, respectively.
Turning to Canada, the S&P/TSX composite index lost 91 points, or 0.58 per cent, led by a reversal and weakness in gold and silver stocks. There were 60 securities in the TSX Index that advanced, 183 securities declined in value, and seven stocks closed the day unchanged.
Month-to-date, the TSX Index is up 1.36 per cent. The Index is just 162 points, or 1 per cent, away from closing at an all-time high.
On today's TSX Breakouts report, there are 29 stocks on the positive breakouts list (stocks with positive price momentum) and 10 securities on the negative breakouts list (stocks with negative price momentum).
Discussed today is an industrial stock that appears on the positive breakouts list. The share price appears overbought in the near-term. Consequently, investors may wish to wait for a pullback for a better entry level. The security highlighted is GDI Integrated Facility Services Inc. (GDI-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Quebec-based, GDI is the largest outsourced provider of janitorial services in Canada and is one of the largest providers in North America. Management's corporate objective is growth, a combination of organic (increasing the customer base and services provided to existing customers) along with acquisition growth.
On Nov. 10, the company reported third-quarter financial results that were in-line with the Street's expectations. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $11.2-milion, up 16 per cent year-over-year and in-line with the consensus estimate of $11.5-million. Earnings per share came in at 18 cents, in-line with the consensus estimate.
On Nov. 13, the company completed the acquisition of Airtron Canada. Airtron realized revenues of approximately $82-million in fiscal 2015. A year from now, management anticipates the acquisition will add roughly $5-million in EBITDA annually.
Dividend policy
The company does not pay its shareholders a dividend.
Valuation
According to Bloomberg, shares of GDI are trading at an enterprise value-to-EBITDA multiple of 8.6 times the 2017 consensus estimate, below its peak multiple of approximately 9.5 times over the past year and right around its one-year average.
Earnings forecasts
The Street is forecasting the company's revenues to near the $1-billion mark this year. The consensus revenue forecast is $869-million in 2016, expanding 15 per cent to $997-million in 2017. The Street is anticipating EBITDA of $41.1-million in 2016, rising 30 per cent to $53.5-million in 2017. The consensus earnings per share estimate is 41 cents in 2016, and expected to nearly double to 81 cents in 2017.
Earnings estimates have climbed higher in recent months. For instance, at the beginning of the second half of 2016, on July 1, the Street was forecasting EBITDA of $40-million for 2016 and $50-million for 2017. The consensus earnings per share estimates were 35 cents for 2016 and 68 cents for 2017.
Analysts' recommendations
According to Bloomberg, this small-cap stock, with a market capitalization of $356-million, is covered by six analysts, of which four analysts have 'buy' recommendations and two have 'neutral' recommendations.
The six firms providing research coverage are as follows in alphabetical order: CIBC World Markets, GMP, Industrial Alliance Securities, National Bank Financial, Scotia Capital, and TD Securities.
The average one-year target price is $18.50, implying the share price may appreciate 10 per cent over the next 12 months. Target prices range from a low of $16.50 to a high of $20. Individual target prices are as follows in numerical order: $16.50, $17, $18.50, $19, and two at $20.
Last month, Damir Gunja, the analyst at TD Securities, lifted his recommendation on GDI to a 'buy' from a 'hold, and bumped his target price to $20 from $16.50. This analyst correctly identified a top for the share price back in August 2015, when he reduced his 'buy' recommendation to a 'hold', and lowering his target price. At the time, the stock price was in the upper teens, but by March 2016, the share price had dropped to the $10 level.
Chart watch
Year-to-date, the share price is up over 6 per cent, extending its 13 per cent gain realized in 2016.
In terms of key resistance and support levels, the share price faces initial overhead resistance around $18, and after that, at $20. There is initial downside support between $15.50 and $16, close to its 50-day moving average (at $15.48). Failing that, there is technical support just below $14, near its 200-day moving average (at $13.82).
The relative strength index is at 70, suggesting the share price is in overbought territory. Generally, a reading at or above 70 indicates an overbought condition.
Liquidity can be low for this stock. The two-month historical daily average trading volume is approximately 16,000 shares.
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The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.