This morning, North American markets look to open relatively unchanged from Monday as market momentum wanes ahead of the holidays.
An important earnings report to watch today is FedEx Corp. (FDX-N) as the company can be a good barometer of business activity. The company will be reporting its financial results after the market closes.
Briefly recapping Monday's stock market performance, major North American equity markets closed in relatively neutral territory.
In the U.S., the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq composite closed up 0.20 per cent, higher by 0.20 per cent, and rose 0.37 per cent, respectively.
In Canada, the S&P/TSX composite index gained 18 points, or 0.12 per cent. There were 141 securities in the TSX Index that advanced, 103 securities declined in value, and six stocks closed the day unchanged. There were eight sectors in the Index that closed with gains led by strength in the health care, technology, real estate, and telecom sectors.
The TSX Index is up 1.24 per cent month-to-date, up 3.69 per cent quarter-to-date, and has a year-to-date gain of 17.37 per cent.
On today's TSX Breakouts report, there are 35 stocks on the positive breakouts list (stocks with positive price momentum), and 27 securities on the negative breakouts list (stocks with negative price momentum), the majority of which, 19 of the 27, are gold and silver related stocks.
As you know, I like to feature a wide variety of securities to appeal to a range of investors. Highlighted today is a technology stock that has increased 57 per cent year-to-date. The stock may appear on the positive breakouts list in 2017 if analysts' bullish forecasts are correct. The company highlighted today is BSM Technologies Inc. (GPS-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
BSM is a provider of services such as remote asset monitoring, fleet tracking, and freight management. To illustrate, the company provides rail asset management to six Class 1 North American railway operators.
After the market closed on Dec. 14, the company reported its fiscal 2016 financial results. The company's fiscal year-end is September 30. The company realized revenue of $59-million in fiscal 2016, up 92 per cent from $30.7-million the prior year, driven by the acquisition of Webtech Wireless Inc. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $8.4-million, up from $2.6-million in fiscal 2015. The company's subscriber base was 152,100, up from 78,500 last year.
In October, the company announced the acquisition of Mobi Corp, which will be reflected in the company's first quarter fiscal 2017 financial results reported in February.
On Dec. 15, Aly Rahemtulla, the chief executive officer, stated on the earnings conference call, "Our target of $100 million in total revenue remains an important medium-term goal. In 2016, we took a significant step in that direction, and we now enter 2017 in a very strong position. We have many of the required building blocks in place. We have a strong sales pipeline and all the financial flexibility we need to achieve both our organic and acquisitive growth goals over time. We're optimistic that 2017 will be our best year yet."
On Dec. 19, management announced the renewal of its share buyback program that will begin on December 23, 2016 and expire on December 22, 2017. Under its current normal course issuer bid, as of December 16, the company had repurchased 7,523,500 shares at a weighted average price of 97.48 cents per share.
Dividend policy
Management is focused on growth and currently does not pays its shareholders a dividend.
Valuation
According to Bloomberg, the stock is trading at an enterprise value-to-sales multiple of 1.3 times the fiscal 2017 consensus estimate, and on an enterprise value-to-EBITDA basis, the stock trades at a multiple of 8.7 times the fiscal 2017 consensus estimate.
The average one-year target price is $1.99, implying the share price may appreciate 47 per cent over the next 12 months. Target prices range from a low of $1.75 to a high of $3. Individual price targets in numerical order are as follows: $1.75, $1.95, three at $2, $2.10, $2.15 and $3.
Analysts' recommendations
This stock, with a market capitalization of $112-million, is well covered by the Street with eight analysts covering the stock, all of whom have "buy" recommendations. These eight analysts are from the following firms in alphabetical order: Beacon Securities, Canaccord Genuity, Clarus Securities, Cormark Securities, GMP, Industrial Alliance Securities, Laurentian Bank Securities, and Paradigm Capital.
The consensus revenue estimates are $71-millon in fiscal 2017, rising to $77-million in fiscal 2018. The Street is forecasting EBITDA of $11-million in fiscal 2017 and $13-million the following year. The consensus earnings per share estimate is 3 cents in fiscal 2017 and 6 cents in fiscal 2017.
Chart watch
Year to date, the share price has increased 57 per cent.
The stock price has overhead resistance around $1.45, its 2016 peak closing price set on October 12.
There is downside support around $1.30, which is at its 50-day moving average. Failing that, there is support around $1.20.
Trading volume can be light. The stock's two-month historical daily average trading volume is approximately 114,000 shares.
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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. This is not a stock recommendation. 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.