The S&P/TSX composite index closed Friday in positive territory, gaining 56 points or 0.4 per cent. Trading volume was low ahead of the U.S. holiday long weekend.
There are 49 securities on the positive breakouts list (stocks with positive price momentum). Meanwhile, there are just five stocks, all small caps, on the negative breakouts list (stocks with negative price momentum).
Discussed today is a small-cap financial stock, with a market capitalization of just over $300-million, MCAN Mortgage Corporation (MKP-T). The stock has provided investors with both income and growth, with the stock price appreciating 15 per cent year-to-date and the dividend yield is 8.3 per cent.
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
MCAN has a diversified portfolio of Canadian mortgages focused on single-family mortgages as well as residential construction loans.
On May 11, MCAN reported earnings per share of 34 cents in the first quarter, up 62 per cent year over year from 21 cents. Return on equity was 11.8 per cent, rising from 7.5 per cent last year.
Managements outlook in the first quarter earnings release was upbeat stating, "Based on a strong level of activity in the first quarter and a good pipeline of deals in construction and commercial, we believe that 2016 originations and portfolio growth will allow us to achieve our annual corporate asset growth target of 10 per cent."
Dividend policy
An important point to note is that the majority of dividends received by shareholders are taxed as interest income due to its mortgage investment corporate structure. MCAN typically distributes all taxable income to its shareholders.
The company pays shareholders a quarterly dividend of 29 cents per share, or $1.16 cents on a yearly basis. This equates to an annualized yield of 8.3 per cent.
During the years 2009 through 2013, the company paid shareholders a special dividend each year.
Valuation
The sole forecast on Bloomberg has the book value per share rising to $13.71 in 2016, suggesting the shares are trading a P/B ratio of less than 1 times the 2016 forecast. This is below the three-year average of 1.2 times, implying there is room for the stock price to appreciate.
Analysts' recommendations
According to Bloomberg, there are two analysts whom cover this stock, both have buy recommendation. One has a one-year price target of $16, and the other has a price target of $14.20. The average one-year price target is $15.10, implying 8 per cent upside in the stock price.
Only one analyst's earnings forecasts are provided on Bloomberg. The EPS estimate is $1.39 in 2016, rising 7 per cent to $1.49 in 2017.
Chart watch
Looking at a long-term chart, the stock price has been consolidating, or trading sideways, predominately between $12 and $15 since 2010.
Year to date, the stock price has appreciated 15 per cent. The chart is positive with the shares in an uptrend since mid-January. There is large upside resistance at $15 and then near its record closing high around $16 ($16.17 reached in February 2011).
The stock has downside support around $13, near its 50-day moving average (at $13.23) and failing that, there is support around $12.
The relative strength index is at 75, suggesting the stock is in overbought territory. Generally, a reading at or above 70 indicates an overbought condition.
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.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
Below is a list of securities principally from the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Securities on the positive breakouts list have displayed positive price momentum during this period. Securities on negative breakouts list have experienced negative price momentum.
Positive Breakouts | |
---|---|
ARE-T | Aecon Group Inc |
AQN-T | Algonquin Power & Utilities Corp |
ACO.X-T | Atco Ltd |
BNK-T | Bankers Petroleum Ltd |
BYD.UN-T | Boyd Group Income Fund |
BAM.A-T | Brookfield Asset Management Inc |
CAE-T | CAE Inc |
CBL-T | Callidus Capital Corp |
FRC-T | Canyon Services Group Inc |
CPX-T | Capital Power Corp |
CVE-T | Cenovus Energy Inc |
CSH.UN-T | Chartwell Retirement Residences |
CLR-T | Clearwater Seafoods Inc |
DSG-T | Descartes Systems Group Inc |
ECA-T | Encana Corp |
ESL-T | Enghouse Systems Ltd |
FSV-T | FirstService Corp |
GMP-T | GMP Capital Inc |
HLF-T | High Liner Foods Inc |
IPL-T | Inter Pipeline Ltd |
IT-T | Intertain Group Ltd |
JE-T | Just Energy Group Inc |
KXS-T | Kinaxis Inc |
LUC-T | Lucara Diamond Corp |
MAL-T | Magellan Aerospace Corp |
MFC-T | Manulife Financial Corp |
MKP-T | MCAN Mortgage Corp |
DR-T | Medical Facilities Corp |
OSB-T | Norbord Inc |
OTC-T | Open Text Corp |
ORL-T | Orocobre Ltd. |
POE-T | Pan Orient Energy Corp. |
PPL-T | Pembina Pipeline Corp |
AAR.UN-T | Pure Industrial Real Estate Trust |
QBR.B-T | Quebecor Inc |
RCH-T | Richelieu Hardware |
RY-T | Royal Bank of Canada |
VII-T | Seven Generations Energy Ltd |
SNC-T | SNC-Lavalin Group Inc |
STN-T | Stantec Inc |
SMU.UN-T | Summit Industrial Income REIT |
SLF-T | Sun Life Financial Inc |
TH-T | Theratechnologies Inc |
TRI-T | Thomson Reuters Corp |
TD-T | Toronto-Dominion Bank |
TFI-T | TransForce Inc |
WTE-T | Westshore Terminals Investment Corp |
WIN-T | Wi-LAN Inc |
WSP-T | WSP Global Inc |
Negative Breakouts | |
EFH-T | Echelon Financial Holdings Inc |
HWD-T | Hardwoods Distribution Inc |
NAL-T | Newalta Corp |
PG-T | Premier Gold Mines Ltd |
S-T | Sherritt International Corp |