Key news releases due out today include the following:
- In Canada, new housing price index data from November, along with Teranet-National Bank House Price Index data from the month of December will both be reported.
In addition, Shaw Communications Inc. reports its first-quarter fiscal 2017 financial results before the market opens.
- In the U.S., weekly initial jobless claims as well as continuing claims data are announced. The weekly natural gas storage report from the U.S. Energy Information Administration will be released at 10:30 a.m. (ET).
On Wednesday, major North American equity markets all closed higher.
In the U.S., the Dow Jones Industrial Average advanced half a per cent, the S&P 500 Index climbed 0.28 per cent, and the Nasdaq composite rallied 0.21 per cent, closing at a record high.
Turning to Canada, the S&P/TSX composite index gained 65 points, or 0.42 per cent, led by strength in the industrials, financials, and materials sectors. The health care sector was the leading detractor with the share price of Valeant Pharmaceuticals International giving back most of Tuesday's gains.
Month to date, the TSX Index is up 1.33 per cent.
On today's TSX Breakouts report, there are 40 stocks on the positive breakouts list (stocks with positive price momentum) and nine securities on the negative breakouts list (stocks with negative price momentum).
As always, this column strives to appeal to a wide range of investors.
Discussed today is a microcap consumer staples stock that may steadily gain attention from investors as it continues to grow. In 2016, the share price rallied over 28 per cent. Currently, the Street is forecasting the stock price will jump over 60 per cent in 2017. Given the high volatility in the share price, at times, this stock is best suited for consideration by those investors with a higher risk tolerance. Indeed, four analysts have 'buy' calls, one of which is a 'speculative buy' recommendation, illustrating the potential heightened risk in the stock. The security highlighted is GreenSpace Brands Inc. (JTR-X).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Toronto-based GreenSpace Brands develops and markets natural food products under brands such as Life Choices, Rolling Meadow Dairy, Holistic Choice, Central Roast, Love Child organics, and Nudge.
On Nov. 2, the company announced that their Central Roast brand will be sold at Starbucks locations across Canada starting in January 2017 with the initial launch of two snack products, "Breakfast" and "Energy".
The following month, on Dec. 12, the company reported plans to purchase Nothing But Nature Inc., an organic juice producer. To finance this acquisition, GreenSpace announced a bought deal equity offering.
The company's fiscal year end is in March 31.
The stock trades on the TSX Venture Exchange.
Dividend policy
The company is focused on growth and currently does not pay its shareholders a dividend.
Analysts' recommendations
According to Bloomberg, this microcap stock, with a market capitalization of $56-million, is covered by four analysts, all have 'buy' recommendations on the stock. One analyst has a "speculative buy" recommendation on the stock. The four firms providing research coverage are as follows in alphabetical order: Alta Corp. Capital, Beacon Securities, Canaccord Genuity, and Cormark Securities.
As disclosed in the company's recent prospectus, James Brown, who sits on the Board of Directors at GreenSpace, is also Vice Chairman of Canaccord Genuity Corp., and a Managing Director at Canaccord's investment banking department.
Valuation
According to Bloomberg, the stock is trading at an enterprise value-to-sales multiple of 1.09 times the fiscal 2018 consensus estimate.
Individual target prices from the four analysts covering the stock are as follows in numerical order: $1.80, $2, and two at $2.25. The average one-year target price is $2.08, implying the share price may appreciate over 62 per cent over the next 12 months.
Earnings forecasts
The consensus revenue estimate is $40.8-million in fiscal 2017, expanding over 30 per cent to $53.8-million in fiscal 2018. The Street is forecasting EBITDA of $1.71-million in fiscal 2017, jumping to $3.66-million in fiscal 2018. The Street is forecasting the company to breakeven in terms of earnings per share in fiscal 2017, and earnings per share to come in at 6 cents in fiscal 2018.
The consensus earnings estimates have been revised higher in recent months. For instance, on July 1, the Street was forecasting revenue of $39.2-million in fiscal 2017 and $51.0-million the following year. The consensus EBITDA estimates were $1.20-million for fiscal 2017 and $3.60-million for fiscal 2018.
Chart watch
The stock has limited trading history as it was publicly listed in 2013.
Last year, the stock price delivered a 29 per cent return. In mid-2016, the share price experienced a parabolic move, rallying to $1.28 on July 29 from 74 cents on May 30. Following this move, the share price digested its gains and slowly drifted down to $1.09 by November 22. During the final month of 2016, the share price recovered, rallying back to the $1.20 level.
On Wednesday, the share price jumped 5.8 per cent on high volume with over 1.7-million shares traded. This is well above the two-month historical daily average trading volume of approximately 160,000 shares.
In terms of key resistance and support levels, the share price faces initial overhead resistance around $1.30, and after that, around $1.40. There is initial downside support around $1.20, which is close to its 50-day moving average (at $1.20). Failing that, there is support around $1, close to its 200-day moving average (at $1.04).
The relative strength index is at 60, suggesting the stock is neither in overbought nor oversold territory.
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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.