A general view of the Sun Life Financial building is seen in Toronto May 6, 2015.FRED THORNHILL/Reuters
Shares of Sun Life Financial Inc. (SLF-T) recently experienced a bullish "Golden Cross".
A "Golden Cross" occurs when a short-term moving average, in this case the 50-day moving average, crosses above a longer-term moving average, in this case the 200-day moving average. When this occurs, it marks a potentially positive signal suggesting the upward price momentum may have traction. This occurrence indicates a potential buying opportunity to investors.
Looking back over the past five years, the stock has experienced three "Golden Crosses" rallying each time after the signal was given.
In May 2012, shares of Sun Life produced a "Golden Cross" and rallied to over $43 in December 2014 from $24. The stock price was in an extended uptrend with the 50-day moving average staying above the 200-day moving average during that entire period.
In June 2015, the price increased approximately 8 per cent after the bullish technical signal was given.
Finally, on May 19, 2016, the share price experienced its latest golden cross and has since appreciated nearly 4 per cent. Rising volume and confirmation from a rising relative strength index confirm the positive price momentum. The stock price could rally back to the $50 level, an area of overhead resistance.
Looking at the fundamentals, analysts on the Street see the stock as nearly fully valued. The average one-year price target is $46.48 based on 12 buy recommendations and four hold recommendations. Price targets range from a low of $43.50 to a high of $50. Earlier this month, the company reported better-than-expected first quarter results with earning per share of 95 cents, beating the consensus estimate of 90 cents.
The company pays shareholders a quarterly dividend of 40.5 cents per unit, representing a yield of 3.5 per cent.
Jennifer Dowty