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-T | Agnico Eagle Mines Ltd |
AGI-T | Alamos Gold Inc |
AQN-T | Algonquin Power & Utilities Corp |
AR-T | Argonaut Gold Inc |
BTO-T | B2Gold Corp |
ABX-T | Barrick Gold Corp |
CAR.UN-T | Canadian Apartment Properties REIT |
REF.UN-T | Canadian Real Estate Investment Trust |
CRR.UN-T | Crombie Real Estate Investment Trust |
DGC-T | Detour Gold Corp |
EMA-T | Emera Inc |
ECI-T | EnerCare Inc |
FTS-T | Fortis Inc |
FNV-T | Franco-Nevada Corp |
H-T | Hydro One Ltd. |
IMG-T | IAMGOLD Corp |
KMP.UN-T | Killam Apartment REIT |
DR-T | Medical Facilities Corp |
OGC-T | OceanaGold Corp |
PVG-T | Pretium Resources Inc |
RIC-T | Richmont Mines Inc |
SSL-T | Sandstorm Gold Ltd |
SMF-T | SEMAFO Inc |
SLW-T | Silver Wheaton Corp |
THO-T | Tahoe Resources Inc |
Negative Breakouts | |
ALS-T | Altius Minerals Corp |
ATA-T | ATS Automation Tooling Systems Inc |
AVO-T | Avigilon Corp |
BAD-T | Badger Daylighting Ltd |
BLD-T | Ballard Power Systems Inc |
BLU-T | BELLUS Health Inc. |
BB-T | BlackBerry Ltd |
BPY.UN-T | Brookfield Property Partners LP |
CCO-T | Cameco Corp |
CNR-T | Canadian National Railway Co |
CP-T | Canadian Pacific Railway Ltd |
CWB-T | Canadian Western Bank |
CUS-T | Canexus Corp |
CFP-T | Canfor Corp |
CLS-T | Celestica Inc |
CVE-T | Cenovus Energy Inc |
GIB.A-T | CGI Group Inc |
CHW-T | Chesswood Group Ltd |
CHR-T | Chorus Aviation Inc |
CIX-T | CI Financial Corp |
CPH-T | Cipher Pharmaceuticals Inc |
CIG-T | Colliers International Group Inc |
CUF.UN-T | Cominar Real Estate Investment Trust |
CXR-T | Concordia Healthcare Corp |
DIV-T | Diversified Royalty Corp |
DOL-T | Dollarama Inc |
DDC-T | Dominion Diamond Corp |
D.UN-T | Dream Office REIT |
EFN-T | Element Financial Corp |
ESI-T | Ensign Energy Services Inc |
FSZ-T | Fiera Capital Corp |
GEI-T | Gibson Energy Inc |
GIL-T | Gildan Activewear Inc |
GWO-T | Great-West Lifeco Inc |
HCG-T | Home Capital Group Inc |
HBC-T | Hudson's Bay Co |
IGM-T | IGM Financial Inc |
IMO-T | Imperial Oil Ltd |
IAG-T | Industrial Alliance Insurance & Financial Services Inc. |
IFP-T | Interfor Corp |
KPT-T | KP Tissue Inc |
LNR-T | Linamar Corp |
L-T | Loblaw Cos Ltd |
MG-T | Magna International Inc |
MFC-T | Manulife Financial Corp |
MRE-T | Martinrea International Inc |
MSL-T | Merus Labs International Inc |
MX-T | Methanex Corp |
MNW-T | Mitel Networks Corp |
MTL-T | Mullen Group Ltd |
NHC-T | Nobilis Health Corp |
PKI-T | Parkland Fuel Corp |
PSG-T | Performance Sports Group Ltd |
POW-T | Power Corp of Canada |
PWF-T | Power Financial Corp |
RY-T | Royal Bank of Canada |
SVC-T | Sandvine Corp |
SCC-T | Sears Canada Inc |
SUM-T | Solium Capital Inc |
SII-T | Sprott Inc |
STN-T | Stantec Inc |
SOX-T | Stuart Olson Inc |
SLF-T | Sun Life Financial Inc |
TRI-T | Thomson Reuters Corp |
TOG-T | TORC Oil & Gas Ltd |
TD-T | Toronto-Dominion Bank |
TR-T | Trillium Therapeutics Inc |
UR-T | UrtheCast Corp |
VRX-T | Valeant Pharmaceuticals International In |
WJX-T | Wajax Corp |
WFT-T | West Fraser Timber Co Ltd |
WEF-T | Western Forest Products Inc |
WPT-T | Westport Innovations Inc |
WB-T | Whistler Blackcomb Holdings Inc |
WSP-T | WSP Global Inc |