Tuesday’s TSX breakouts: This stellar performer has a history of special dividends

Today, there are 57 securities on the positive breakouts list (stocks with positive price momentum) and there are no stocks on the negative breakouts list (stocks with negative price momentum).

I am highlighting a large-cap stock that is breaking out to the upside with its positive price momentum, yet it does not appear on the positive breakouts list. The stock trades on the Toronto Stock Exchange; however, it is not in the S&P/TSX composite index. Discussed below is Winpak Ltd. (WPK-T), a stock with stellar long-term price performance.

A brief outline is provided that may serve as a springboard for further fundamental research.

The company

Winpak manufactures packaging machines and materials, which are used principally in the food and beverage industry, and health care market.

Last month, the company reported better-than-expected fourth-quarter financial results sending the share price higher. Earnings per share came in at 43 cents (U.S.), surpassing the consensus earnings estimate of 41 cents.

Dividend policy

Winpak pays shareholders a quarterly dividend of three cents per share, or 12 cents a share per year, equating to a small annualized yield of 0.2 per cent. However, in 2015, the company paid a special dividend of $1.50 per share, and in 2014 a special dividend of $1 per share was paid to shareholders.

Valuation

The stock appears expensive relative to historical levels.

The company reports in U.S. dollars. Using an exchange rate of 1.31 to convert U.S. dollars into Canadian dollars, the stock is trading at a price-to-earnings multiple of 22.7 times the consensus 2016 earnings estimate and at 20.9 times the consensus 2017 estimate. This valuation is at the top end, close to the peak, of its historical three-year average, suggesting the stock is fully valued. Similarly, on an enterprise value-to-earnings before interest, taxes, depreciation and amortization (EBITDA) basis, the stock is trading at the upper end of its historical range.

Analysts' Recommendations

According to Bloomberg, there are two recent buy recommendations, three hold recommendations, and there are no sell recommendations. The average one-year price target amongst these analysts is $48.30, suggesting the share price is fully valued. Price targets range from a low of $45 to a high of $53. Individual target prices are as follows: $45, $46.50, $47, $50, and $53.

The consensus EBITDA estimate is $191.4-million in 2016, up from $179-million reported in 2015, and anticipated to rise 8 per cent to $206.6-million in 2017. The Street is forecasting earnings per share of $1.65 (U.S.) in 2016, up from $1.53 reported in 2015, and forecast to climb over 8 per cent to $1.79 in 2017.

Chart Watch

The long-term chart is attractive with the stock in a multi-year uptrend. Year to date, the share price is up nearly 8 per cent.

Looking at technical resistance and support levels, the next overhead resistance level is around $50. There is downside support around $47, then around $44.50, which is close to the stock's 50-day moving average (at $44.44), then around $42.50, close to its 200-day moving average (at $42.47), and large support at $40.

The relative strength index is over 74, suggesting the shares are in overbought territory. Generally, a reading of 70 or higher indicates an overbought condition. That being said, a security can remain overbought for some time.

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 in 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.