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Talisman a rare highlight in overbought, expensive TSX Add to ...

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The S&P/TSX Composite index spent another week treading water, adding a mere 0.4 per cent for the past five trading sessions. On a Relative Strength Index (a technical indicator measuring momentum) basis, the domestic benchmark sits right at the overbought sell signal of 70.

The S&P/TSX right now is technically overbought and more expensive than the S&P 500 on both forward and trailing earnings. All of these things are regrettable for the market at large, particularly for investors looking to hold the entire index.


According to Bloomberg data, Talisman’s valuations are are out of whack – the forward price-to-earnings ratio is 109 times – but analysts remain reasonably positive on the stock. The average 12-month price target for the stock is $14.09, which is 28 per cent higher than Thursday’s closing price.

Talisman has responded well to the RSI buy signal over the past two years. In May 2012, the RSI dipped to 23 and the stock rallied 33 per cent over the next four months. Similar, if less dramatic gains were made after buy signals in November of 2012 and December of 2013.

Talisman is a much different company now after asset sales, so this is one case where it’s really important for investors to do fundamental research before going anywhere near it.

The small print applies to technical indicators like RSI, as usual. I’m using the 14-day RSI, the most widely used version, and the readings can change extremely quickly. I strongly advise that no trader or investor buy any stock based solely on technical indicators – they need to be combined with fundamental research.

RSI1W Return %PE Ratio TTMPE Ratio Fwd
**OVERSOLD**
Aimia IncAIM20.19-3.37#N/A N/A23.58
Talisman Energy IncTLM28.48-2.78#N/A N/A109.87
Catamaran CorpCCT29.42-4.4135.1320.49
Lightstream Resources LtdLTS30.99-9.821624.67
Rona IncRON31.38-1.56#N/A N/A14.37
**OVERBOUGHT**
Parkland Fuel CorpPKI89.8310.616.04#N/A N/A
Methanex CorpMX83.884.0619.0712.08
Jean Coutu Group Inc-Class APJC.A83.765.0315.7318.35
Can Imperial Bk Of CommerceCM83.32.9110.6810.87
Imperial Oil LtdIMO82.354.5314.6611.51
Ccl Industries Inc - CL BCCL.B79.754.4823.3616.72
Linamar CorpLNR79.547.3515.0813.25
Canadian Energy Services & TCEU78.863.836330.96
Novagold Resources IncNG78.819.05#N/A N/A#N/A N/A
Agrium IncAGU78.643.9913.5212.64
Ithaca Energy IncIAE78.0510.535.155.88
Onex CorporationOCX75.64.43#N/A N/A175.09
Tahoe Resources IncTHO75.466.2#N/A N/A34.34
Magna International IncMG75.078.0713.1911.86
Pason Systems IncPSI74.866.0836.9119.79
B2gold CorpBTO74.818.8339.2728.3
Aecon Group IncARE74.25.8621.2414.23
Capital Power CorpCPX73.466.3311.7918.35
Legacy Oil + Gas IncLEG73.319.03#N/A N/A27.59
Firstservice CorpFSV73.192.65#N/A N/A19.12
Alacer Gold CorpASR73.133.99#N/A N/A12.84
Element Financial CorpEFN72.956.4472.3824.84
Fairfax Financial Hldgs LtdFFH72.924.1122.9630
Saputo IncSAP72.591.9420.2917.75
Silver Standard ResourcesSSO72.584.817.27#N/A N/A
Enerflex LtdEFX72.226.9522.4614
Semafo IncSMF71.822.4641.863.33
Gibson Energy IncGEI71.675.625.530.36
Altagas LtdALA71.62.8428.6724.61
Calfrac Well Services LtdCFW71.265.6458.4525.78
Allied Properties Real EstatAP-U70.864.769.9318.2
Bankers Petroleum LtdBNK70.785.3623.2715.01
Genworth Mi Canada IncMIC70.769.0210.4310.39
Trinidad Drilling LtdTDG70.344.619.2916.81
Osisko Mining CorpOSK70.346.81#N/A N/A36.38
Major Drilling Group IntlMDI70.338.74#N/A N/A35.48
Meg Energy CorpMEG70.282.27#N/A N/A22.61
Bellatrix Exploration LtdBXE70.266.7126.8415.6
Shoppers Drug Mart CorpSC70.070.4320.419.14
Loblaw Companies LtdL70.060.3520.6916.6
Canadian Natural ResourcesCNQ69.741.0619.2714.53
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