In Canada, watch for December manufacturing sales data and January existing home sales figures today.
In terms of earnings releases for Canadian stocks, companies scheduled to release their quarterly results include: Teck Resources Ltd. (TECK.B-T), Cineplex Inc. (CGX-T), Colliers International Group Inc. (CIGI-T), Agnico-Eagle Mines Ltd. (AEM-T), Goldcorp Inc. (G-T), Barrick Gold Corp. (ABX-T), Constellation Software Inc. (CSU-T), H&R Reit (HR.un-T), New Gold Inc. (NGD-T), Smart REIT (SRU.un-T), and Sun Life Financial (SLF-T).
In the U.S., watch closely for inflation figures, January retail sales numbers, February Empire manufacturing data and weekly mortgage applications figures. In addition, U.S. Federal Reserve Chair, Janet Yellen, will be speaking before Congress for a second day, providing the semi-annual monetary policy report.
On the commodity front, the price of oil is slightly lower this morning ahead of the weekly oil inventory report released by the U.S. Energy Information Administration. Meanwhile, the price of natural gas futures are firmer by 2 per cent and the price of gold is relatively unchanged.
Briefly recapping Tuesday's stock market returns, the positive momentum continued for major North American equity markets, which extended their gains and closed at all-time highs once again.
In the U.S., the Dow Jones Industrial Average rallied 0.45 per cent, the S&P 500 index advanced 0.40 per cent, and the Nasdaq composite index gained 0.32 per cent.
Turning to Canada, the S&P/TSX composite index increased 29 points, or 0.19 per cent. There were 136 securities in the TSX Index that advanced, 105 securities declined in value, and eight stocks closed the day unchanged.
The TSX Index is up 3.26 per cent year to date.
On today's TSX Breakouts report, there are 60 stocks on the positive breakouts list (stocks with positive price momentum), and just 10 stocks are on the negative breakouts list (stocks with negative price momentum).
The security highlighted today is a stock that appears on the negative breakouts list. The stock may soon find downside support given its reasonable valuation. In addition, the company offers investors an attractive dividend yield of 3.2 per cent with a dividend paid in U.S. dollars. The company is Intertape Polymer Group Inc. (ITP-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Intertape develops and manufactures products, such as carton sealing tapes and industrial and specialty tapes and fabrics, used in industrial, automotive, and aerospace applications. Intertape is North America's second largest tape manufacturer. In 2015, 66 per cent of net sales were from tapes, 19 per cent from films, and 19 per cent of revenues were from woven and other products. The company has a total of 14 manufacturing facilities, 12 are located in North America (most are in the United States), one is in Portugal, and one is in India.
In November, the company reported weaker-than-expected third quarter earnings results. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $27.2-million, below the consensus estimate of $31-million, as the South Carolina Flood that occurred in October 2015 continued to negatively impact its financial results. The share price was relatively unchanged that day, declining 12 cents to $22.50, or by half a per cent.
On the third-quarter conference call, management indicated that they expect to see future benefits from their capital investments, stating, "We certainly expect to get a lift from some of these projects coming online. There is a lot coming online, call it, in 2017. So as you said, I can't give guidance at this point, but I would say that we should see something above the average that we've been talking about in the past."
The corporate headquarters is located in Montreal.
Dividend policy
The company pays investors a quarterly dividend in U.S. dollars of 14 cents per share, or 56 cents per share yearly. This equates to an annualized dividend yield of approximately 3.2 per cent. For the past three years during the month of August, management has announced a dividend increase.
Financial forecasts
The company reports its financial results in U.S. dollars. The Street is forecasting EBITDA to come in at $118-million in 2016, rising 17 per cent to $138-million in 2017, and climbing to $149-million in 2018. On the third-quarter conference call, management guided to realizing adjusted EBITDA of between $117-million and $123-million in 2016. The consensus earnings per share (EPS) estimates are $1.03 in 2016, $1.14 in 2017, and $1.23 in 2018.
Over the past six months, forecasts have been relatively stable with minor revisions. In August 2016, the consensus EBITDA estimates were $120-million in 2016 and $132-million the following year. The consensus EPS forecasts were $1.00 in 2016 and $1.11 in 2017.
Valuation
Given the recent sell-off in the share price, the stock's valuation appears reasonable.
According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 9 times the 2017 consensus estimate, relatively in-line with its three-year historical average multiple of 8.7 times. On a price-to-earnings basis, the stock is trading at a multiple of 15.5 times the 2017 consensus estimate, in-line with its three year historical average multiple of 15.4 times.
The consensus one-year target price is $27.63, suggesting a potential price return of 19 per cent over the next 12 months. If you include the dividend, the potential total return forecast is approximately 22 per cent.
Individual target prices range from a low of $26 (at Industrial Alliance Securities) to a high of $29 (at TD Securities). Individual target prices provided by six firms are as follows in numerical order: $26, $27.50, three at $28 and $29.
Analysts' recommendations
This small cap stock, with a market capitalization of $1.37-billion, is covered by seven analysts, six analysts have "buy" recommendations, and one analyst (from EVA Dimensions) has a "hold" recommendation.
The seven firms providing research coverage are as follows in alphabetical order: Cormark Securities, EVA Dimensions, GMP, Industrial Alliance Securities, RBC Capital Markets, Scotia Capital, and TD Securities.
Revised target prices
Analysts have been revising their target prices higher. For instance, this month, Gavin Fairweather, the analyst at Cormark Securities, increased his target price to $27.50 from $26.50. In January, Damir Gunja, the analyst at TD Securities, increased his target price to $29 from $27.
Chart watch
The share price is under pressure, falling 8 per cent year-to-date.
There is initial downside support around $22, near its 200-day moving average (at $22.28). Failing that, there is support around $20. Conversely, there appears to be initial upside resistance between $25 and $25.50, and after that, around $30.
The relative strength index is at 37, suggesting the shares are not yet in oversold territory despite the recent price weakness. Generally, a reading at or below 30 indicates an oversold condition.
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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. 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.