Skip to main content

It was another painful session for investors in equity markets on Monday with the S&P/TSX composite index falling over 200 points, or 1.5 per cent. Within the index, only 60 stocks advanced, 178 stocks declined, and two stocks were unchanged.

However, what was interesting to note was the falling VIX Index, commonly referred to as a fear gauge. It declined to 23.9 from 25.8, suggesting nervousness in the markets was easing. This morning, the VIX Index down again, to 21.8, with major European equity markets up sharply.

North American equity markets are poised for a recovery today.

On today's Breakouts Report, there are 25 securities on the positive breakouts list (stocks with positive price momentum). Meanwhile, the list of securities on the negative breakouts list (stocks with negative price momentum) soared to 75 stocks, likely marking a peak.

Discussed today is a bank stock that surfaced on the negative breakouts list – Royal Bank of Canada (RY-T). It is a challenging environment for financial stocks, which may limit upside near-term positive price momentum. Royal Bank is a solid company but industry conditions remain a significant headwind. Year to date, the stock price has had little traction and been relatively flat, advancing just 1 per cent.

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

The company

Royal Bank is the largest bank in Canada.

Dividend policy

The company pays shareholders a quarterly dividend of 81 cents per share or $3.24 on a yearly basis. This equates to an annualized yield of 4.3 per cent.

Since 2012, the company has announced a dividend increase every August. Based on its history, another dividend increase may be announced when the company reports its quarterly earnings on August 24.

Valuation

Despite the recent sell-off, the valuation is not compelling, trading in-line with its historical average. According to Bloomberg, the stock is trading at a price-to-earnings multiple of 10.7 times the fiscal 2017 consensus estimate, relatively in-line with its five-year historical average of 10.8 times. Over the past five years, the stock has traded at a forward P/E multiple largely between 9.5 times to 12.5 times.

Analysts' recommendations

According to Bloomberg, the one-year price target is $81.95, which is based on six buy recommendations, seven hold recommendations, and two sell recommendations. This suggests the share price may appreciate 9 per cent over the next 12 months.

The consensus earnings per share estimate is $6.74 in 2016, increasing 4.7 per cent to $7.06 in 2017.

Chart watch

Over the past two trading sessions, the stock price has declined 5.6 per cent and very high volume. On Monday, over 7.4 million shares traded, well above its two month average daily trading volume of approximately 4.2 million shares.

The stock is approaching initial downside support around $75, and after that there is support at its 200-day moving average, which lies at $74.26. Failing that, the stock has strong support between $70 and $72.

The relative strength index is at 36, suggesting the shares are not overbought. Generally, a reading at or below 30 indicates an oversold condition.

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 principally from 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.

Positive Breakouts
AEM-TAgnico Eagle Mines Ltd
AGI-TAlamos Gold Inc
AQN-TAlgonquin Power & Utilities Corp
AR-TArgonaut Gold Inc
BTO-TB2Gold Corp
ABX-TBarrick Gold Corp
CAR.UN-TCanadian Apartment Properties REIT
REF.UN-TCanadian Real Estate Investment Trust
CRR.UN-TCrombie Real Estate Investment Trust
DGC-TDetour Gold Corp
EMA-TEmera Inc
ECI-TEnerCare Inc
FTS-TFortis Inc
FNV-TFranco-Nevada Corp
H-THydro One Ltd.
IMG-TIAMGOLD Corp
KMP.UN-TKillam Apartment REIT
DR-TMedical Facilities Corp
OGC-TOceanaGold Corp
PVG-TPretium Resources Inc
RIC-TRichmont Mines Inc
SSL-TSandstorm Gold Ltd
SMF-TSEMAFO Inc
SLW-TSilver Wheaton Corp
THO-TTahoe Resources Inc
Negative Breakouts
ALS-TAltius Minerals Corp
ATA-TATS Automation Tooling Systems Inc
AVO-TAvigilon Corp
BAD-TBadger Daylighting Ltd
BLD-TBallard Power Systems Inc
BLU-TBELLUS Health Inc.
BB-TBlackBerry Ltd
BPY.UN-TBrookfield Property Partners LP
CCO-TCameco Corp
CNR-TCanadian National Railway Co
CP-TCanadian Pacific Railway Ltd
CWB-TCanadian Western Bank
CUS-TCanexus Corp
CFP-TCanfor Corp
CLS-TCelestica Inc
CVE-TCenovus Energy Inc
GIB.A-TCGI Group Inc
CHW-TChesswood Group Ltd
CHR-TChorus Aviation Inc
CIX-TCI Financial Corp
CPH-TCipher Pharmaceuticals Inc
CIG-TColliers International Group Inc
CUF.UN-TCominar Real Estate Investment Trust
CXR-TConcordia Healthcare Corp
DIV-TDiversified Royalty Corp
DOL-TDollarama Inc
DDC-TDominion Diamond Corp
D.UN-TDream Office REIT
EFN-TElement Financial Corp
ESI-TEnsign Energy Services Inc
FSZ-TFiera Capital Corp
GEI-TGibson Energy Inc
GIL-TGildan Activewear Inc
GWO-TGreat-West Lifeco Inc
HCG-THome Capital Group Inc
HBC-THudson's Bay Co
IGM-TIGM Financial Inc
IMO-TImperial Oil Ltd
IAG-TIndustrial Alliance Insurance & Financial Services Inc.
IFP-TInterfor Corp
KPT-TKP Tissue Inc
LNR-TLinamar Corp
L-TLoblaw Cos Ltd
MG-TMagna International Inc
MFC-TManulife Financial Corp
MRE-TMartinrea International Inc
MSL-TMerus Labs International Inc
MX-TMethanex Corp
MNW-TMitel Networks Corp
MTL-TMullen Group Ltd
NHC-TNobilis Health Corp
PKI-TParkland Fuel Corp
PSG-TPerformance Sports Group Ltd
POW-TPower Corp of Canada
PWF-TPower Financial Corp
RY-TRoyal Bank of Canada
SVC-TSandvine Corp
SCC-TSears Canada Inc
SUM-TSolium Capital Inc
SII-TSprott Inc
STN-TStantec Inc
SOX-TStuart Olson Inc
SLF-TSun Life Financial Inc
TRI-TThomson Reuters Corp
TOG-TTORC Oil & Gas Ltd
TD-TToronto-Dominion Bank
TR-TTrillium Therapeutics Inc
UR-TUrtheCast Corp
VRX-TValeant Pharmaceuticals International In
WJX-TWajax Corp
WFT-TWest Fraser Timber Co Ltd
WEF-TWestern Forest Products Inc
WPT-TWestport Innovations Inc
WB-TWhistler Blackcomb Holdings Inc
WSP-TWSP Global Inc