Wednesday’s TSX breakouts: 13 buys for this infrastructure dividend stock

Today, there are 24 stocks on the positive-breakouts list, and just six stocks on the negative-breakouts list.

One positive breakout is Aecon Group (ARE-T), which provides construction and infrastructure development services, operating in three market segments: energy, infrastructure and mining.

On Nov. 11, the company reported third-quarter results that beat expectations; however, management's modest outlook calling for the fourth quarter to be "broadly in line with the previous year" sent the stock price down more than 8 per cent. The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $76-million, above the consensus estimate of $69-million. In addition, the company's backlog, an indicator of future revenues, rose to a record high at $3.4-billion.

Dividend Policy

The company pays a quarterly dividend to its shareholders of 10 cents per share, or 40 cents per annum. This equates to an annualized yield of 2.5 per cent.

If history follows, there could be a dividend rate hike announcement in March, 2016. The company has announced a dividend hike in March of each year since 2012.

Valuation

The stock trades at an enterprise value to EBITDA multiple of over 7 times the 2016 consensus estimate, which is above its historical averages. The company's five-year historical average is 5.5 times, and its 10-year historical average lies around 6 times.

Analysts' Recommendations

According to Bloomberg, there are 13 analysts with buy recommendations and one analyst with a hold recommendation. The average one-year target price is $17.38, implying a potential one-year price return, not including the dividend yield, of 10 per cent. Price targets range from $15 to $20.

The consensus sales estimate is $2.8-billion in 2015, rising to $2.9-billion in 2016. The consensus EBITDA forecast is $173-million in 2015, and staying relatively unchanged at $172-million in 2016. The consensus earnings per share estimate is 77 cents in 2015, rising to 99 cents in 2016.

Technical Analysis

Year-to-date, the stock price is up 47 per cent, outperforming its infrastructure peers such as Bird Construction and Stuart Olson, which are up over 10 per cent and down 22 per cent, respectively.

There is downside support at $14.70, where its 50-day moving average lies, and failing that at $14. There is upside resistance around $16, and then near $17.

The relative strength index is at 72, suggesting the shares are in overbought territory and may need to consolidate, or trade sideways, before climbing higher. Generally, a reading at or above 70 indicates an overbought condition.

The average daily volume over the past two months is just under 600,000 shares.

As always, I strongly encourage readers to consult a financial adviser, and to do their own proper due diligence before taking any investment action.

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.