The S&P/TSX composite index is less than 50 points away from hitting the 14,000 level, where the index stood back in August 2015, before the summer market meltdown. Today, with the price of oil up and North American futures higher, it looks like we may just cross the 14,000 level.
The number of stocks on the positive breakouts list (stocks with positive price momentum) has climbed to 44 names. Meanwhile, there are just seven stocks, all small cap stocks, on the negative breakouts list (stocks with negative price momentum).
Discussed today is the Toronto-Dominion Bank (TD-T), a stock that appears on the positive breakouts list with its share price gaining strength as its reporting date approaches.
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
TD Bank is the 6th largest bank in North America as measured by total assets.
Before the market opened on Feb. 25, the company reported lower-than-expected earnings. Adjusted earnings per share (EPS) came in at $1.18, compared to the Street's expectations of $1.20. Adjusted return on equity 13.5 per cent down from 15.1 per cent last year. The Common Equity Tier 1 ratio was 9.9 per cent, unchanged from last quarter. The book value per share was $35.99. The stock price increased 69 cents or 1.3 per cent that day.
The company will be reporting second-quarter financial results before the market opens on Thursday. The consensus EPS estimate is $1.17.
Dividend policy
The company pays shareholders a quarterly dividend of 55 cents per share, or $2.20 on a yearly basis. This equates to an annualized yield of 3.9 per cent. The payout ratio was 43.6 per cent in the first-quarter, in-line with management's targeted payout ratio of between 40 per cent and 50 per cent of adjusted earnings.
Valuation
According to Bloomberg, on a price-to-earnings (P/E) basis, the stock is trading at a multiple of 12 times the 2016 consensus estimate, slightly above the three-year historical average of 11.8 times.
Looking forward to next year, the stock is trading at a P/E multiple of 11.4 times the 2017 consensus earnings estimate, which is again, marginally above its three-year historical average of 11 times. During the past three years, the peak valuation was approximately 12.5 times.
Analysts' recommendations
According to Bloomberg, the one year price target is $57.48, suggesting the shares are fully valued. There are 12 buy recommendations, 4 hold recommendations, and one sell recommendation. Price targets range from a low of $47 to a high of $65.
The consensus EPS estimate is $4.76 in 2016, rising 5 per cent to $5.01 in 2017. Management is targeting between 7 per cent and 10 per cent of EPS growth over the medium term.
Chart watch
For most of 2016, the stock price has been consolidating, trading sideways in a range between $50 and $55.
In terms of year-to-date performance, shares of TD Bank have appreciated 5.1 per cent year-to-date, representing the laggard of the "Big 6" banks. Scotiabank is the leader, rising 13.9 per cent year-to-date, followed by CIBC, its stock price is up 12.8 per cent. Shares of National Bank have rallied 6.9 per cent, shares of the Bank of Montreal are up 6.5 per cent year-to-date, and Royal Bank's stock price has rallied 5.9 per cent.
Shares of TD are approaching large overhead resistance around $58. The record closing high for the stock was $57.85, reached in August 2014.
There is downside support around $55, below its 50-day moving average (at $55.72), then at $53.50, near its 200-day moving average (at $53.54). Failing that, there is large support around $50.
The relative strength index is at 66, suggesting the shares are in neutral territory, neither overbought nor oversold.
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 | |
---|---|
ARE-T | Aecon Group Inc |
AFN-T | Ag Growth International Inc |
AIF-T | Altus Group Ltd |
ACO.X-T | Atco Ltd |
BMO-T | Bank of Montreal |
BCE-T | BCE Inc |
BNP-T | Bonavista Energy Corp |
BAM.A-T | Brookfield Asset Management Inc |
CM-T | CIBC |
CGX-T | Cineplex Inc |
CLR-T | Clearwater Seafoods Inc |
BCB-T | Cott Corp |
DSG-T | Descartes Systems Group Inc |
FN-T | First National Financial Corp |
FSV-T | FirstService Corp |
MIC-T | Genworth MI Canada Inc |
HLF-T | High Liner Foods Inc |
IAG-T | Industrial Alliance Insurance & Financial Services |
KPT-T | KP Tissue Inc |
MFC-T | Manulife Financial Corp |
DR-T | Medical Facilities Corp |
MST.UN-T | Milestone Apartments REIT |
OTC-T | Open Text Corp |
PPY-T | Painted Pony Petroleum Ltd |
QBR.B-T | Quebecor Inc |
QSR-T | Restaurant Brands International Inc |
RCH-T | Richelieu Hardware |
RBA-T | Ritchie Bros Auctioneers Inc |
RME-T | Rocky Mountain Dealerships Inc |
RSI-T | Rogers Sugar Inc |
SIA-T | Sienna Senior Living Inc |
SW-T | Sierra Wireless Inc |
SNC-T | SNC-Lavalin Group Inc |
SMU.UN-T | Summit Industrial Income REIT |
SLF-T | Sun Life Financial Inc |
TH-T | Theratechnologies Inc |
TRI-T | Thomson Reuters Corp |
X-T | TMX Group Ltd |
TD-T | Toronto-Dominion Bank |
TRP-T | TransCanada Corp |
TFI-T | TransForce Inc |
UNS-T | Uni-Select Inc |
VSN-T | Veresen Inc |
WIN-T | Wi-LAN Inc |
Negative Breakouts | |
BOS-T | AirBoss of America Corp |
DDC-T | Dominion Diamond Corp |
MSL-T | Merus Labs International Inc |
NAL-T | Newalta Corp |
NIF.UN-T | Noranda Income Fund |
PG-T | Premier Gold Mines Ltd |
SXP-T | Supremex Inc |