Tuesday’s TSX breakouts: Barrick's chairman is snapping up shares

On today's breakouts, there are 25 stocks on the positive breakouts list (stocks with positive price momentum), while there are nine stocks on the negative breakouts list (stocks with negative price momentum).

Discussed below is a stock that has is being accumulated its chairman – Barrick Gold Corporation (ABX-T). Barrick Gold is the top performing gold stock in the S&P/TSX composite index, rising 83 per cent in the year to date. Despite this parabolic move in the stock price, chairman John Thornton has been buying shares.

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

Barrick Gold is a senior gold producer with operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, United States and Zambia. Approximately 70 per cent of its expected 2016 production is anticipated to come from its five core mines located in the Americas.

In 2015, the company produced over 6 million ounces of gold at all-in sustaining costs of $831 per ounce. Looking forward to 2016, management anticipated production will be between 5 million and 5.5 million ounces of gold at costs of between $775 and $825 per ounce, and between 370 million and 410 million pounds of copper at costs of between $2.05 and $2.35 per pound. One of the company's goals is to reduce all-in sustaining costs to below $700 per ounce by the end of 2019.

Dividend policy

Barrick Gold pays shareholders a quarterly dividend of 2 cents (U.S.) per share, or 8 cents a year, equating to an annualized yield of 0.6 per cent.

Insider transactions

John Thornton, the Chairman of Barrick, purchased 330,000 shares on February 25, and acquired 158,224 shares on December 31 2015.

Valuation

The stock is valued on a price-to-net asset value (NAV) basis, and trades at a premium valuation relative to its peers. Valuations vary widely depending on assumptions in the NAV calculation and the multiple applied to the NAV. Consequently, price targets range widely for Barrick Gold, from a low of $9.60 (Canadian) to a high of $22.05. The average one-year price target is $16.22, implying the shares are fully valued at current levels.

Analysts' Recommendations

According to Bloomberg, there are 10 analysts with a buy recommendations, 16 analysts with hold recommendations, and 1 analyst with a sell recommendation.

The consensus earnings per share estimate is 36 cents (U.S.) in 2016, rising to 45 cents in 2017. The consensus cash flow per share estimate is $1.74 (U.S.) in 2016, rising 10 per cent to $1.92 in 2017.

Chart Watch

The share price has experienced a parabolic move, rising to $18.75 (Canadian) from $10.24 in the past two months. In addition, the share price has been climbing higher on high volume – a bullish sign. However, in the near-term, the stock may need to consolidate these gains, and the positive price momentum may be due for a pause.

There is overhead resistance between $20 and $21. There is downside support near $16, and failing that there is strong support around $13.50, near its 50-day moving average.

The relative strength index is at 72, suggesting the stock is in overbought territory. Generally, a reading at or above 70 indicates an overbought condition. That being said, a stock 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 stock 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 stock 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 stocks 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. Stocks on the positive breakouts list have displayed positive price momentum during this period. Stocks on negative breakouts list have experienced negative price momentum.