On Wednesday, major North American stock markets all closed the trading session with losses.
In the U.S., the Dow Jones Industrial Average decreased 0.29 per cent, the S&P 500 index lost 0.38 per cent, and the Nasdaq composite index fell 0.52 per cent.
In Canada, the S&P/TSX composite index gave back 79 points, or 0.50 per cent. There were 94 securities in the TSX Index that advanced, 142 securities declined in value, and 15 stocks closed the day unchanged. Gold stocks were amongst the leading performers.
The TSX Index is up 2.36 per cent year-to-date.
On today's TSX Breakouts report, there are 42 stocks on the positive breakouts list (stocks with positive price momentum), and 19 stocks are on the negative breakouts list (stocks with negative price momentum).
On Wednesday, we highlighted a small cap gold stock, Atlantic Gold Corp. (AGB-X), that is nearing production with operations in Atlantic Canada. Featured today is a top performing mid-cap gold stock that has operations in western Canada. The security I am referred to Pretium Resources Inc. (PVG-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Vancouver-based Pretium continues to advance its operations towards its goal of full production at its high-grade underground gold project, its Brucejack Mine, located in northern British Columbia. A feasibility study indicates the Brucejack project to have a mine life of 18 years, and average annual production in year one through to year eight of 504,000 ounces, and average annual production of 404,000 ounces over the life of the mine. Once the company ramps up to full production, the stock's valuation could expand, with a re-rating of the shares to a producer status.
The stock is listed on both the Toronto Stock Exchange as well as the New York Stock Exchange under the same ticker, PVG.
In addition, commodity price strength may give the stock price a lift. The price of gold appears poised to potentially revisit the $1,300 (U.S.) an ounce level. India, the second-largest consumer of gold, recently reported a spike in gold imports, rising to 89 tonnes in February, up from 36 tonnes reported during the same month last year.
Dividend policy
Management is focused on growth. Consequently, the company does not pay its shareholder a dividend.
Analysts' recommendations
There are 10 firms that have provided research coverage on this mid-cap stock since the beginning of the year. The firms providing research coverage are as follows in alphabetical order: BMO Capital Markets, Canaccord Genuity, CIBC World Markets, Cormark Securities, Credit Suisse, Numis, RBC Capital Markets, Rodman & Renshaw, Roth Capital Partners, and Scotia Capital.
There are eight analysts who have buy recommendations and two analysts have hold recommendations.
Financial forecasts
The consensus revenue estimates are $200-million in 2017, $689-million in 2018, and $792-million in 2019. The consensus earnings before interest, taxes, depreciation and amortization (EBITDA) estimates are $70-million in 2017, $475-million in 2018, and $561-million in 2019. The Street is forecasting earnings per share of 25 cents in 2017, $1.24 in 2018, and $1.49 in 2019. The consensus cash flow per share estimates are 50 cents in 2017, $2.44 in 2018, and $2.67 in 2019.
Valuation
The stock can be valued on a price-to-net asset value basis.
The average one-year target price is $18.83, suggesting there is 26 per cent upside potential in the share price over the next 12 months. Target prices range from a low of $15.75 to a high of approximately $22 ($16.50 U.S.). Individual target prices are as follows, expressed in Canadian dollars unless otherwise indicated and are in numerical order: $15.75, $16.50, $17.50, $13.50 (U.S.), $18, two at $19.50, $20, $16 (U.S.), $16.50 (U.S.), .
Insider transaction activity
Shaoyang Shen, who sits on the board of directors, purchased 15,000 shares at a price of $13.20 per share on March 1, and the following day bought 17,000 shares at a price of $12.95 per share, bringing his portfolio's position up to 32,000 shares.
Chart watch
Year to date, the stock price is up 34 per cent. However, the move higher has not been linear. The share price can be volatile, moving up and down with the price of gold.
Should the positive price momentum continue, there is initial overhead resistance around $16, and after that, around $18. Should the positive price momentum pause and the share price retreat, there is initial support between $13.50 and $14.50, close to its 50-day moving average (at $14.31) and also near its 200-day moving average (at $13.49). Failing that, there is support around $12.
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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.