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On Tuesday, major North American stock markets closed with gains.

In the U.S., the Dow Jones Industrial Average gained 0.17 per cent, the S&P 500 index advanced 0.12 per cent, and the Nasdaq composite index climbed higher by 0.06 per cent.

In Canada, the S&P/TSX composite index rallied 44 points, or 0.28 per cent. There were 132 securities in the TSX Index that advanced, 112 securities declined in value, and six stocks closed the day unchanged.

Year-to-date, the TSX Index is up 2.17 per cent year. In the U.S., the Dow Jones Industrial Average is up 6.01 per cent year-to-date, the S&P500 index is up 6.8 per cent, and the Nasdaq composite has rallied 13.23 per cent.

On today's TSX Breakouts report, there are 50 stocks on the positive breakouts list (stocks with positive price momentum), and an equal number of stocks are on the negative breakouts list (stocks with negative price momentum).

Featured today is a stock that has rallied sharply the day it released its quarterly earnings. Looking back over the past six quarters, the daily returns on its reporting day are as follows, starting with the most recent quarter: 6.9 per cent, 4.3 per cent, 4.4 per cent, 4.5 per cent, 7.8 per cent, and 2.1 per cent. Strong same store sales growth, dividend increases, and share buybacks have helped drive the share price higher. The security I am referred to is Canadian Tire Corporation (CTC.A-T).

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

The company

Canadian Tire has approximately 1,700 retail stores and gas stations across the country under banners such as Canadian Tire, Mark's, Sport Chek and Sports Experts. Canadian Tire's retail segment offers investors a diversified platform with exposure to a variety of consumer markets such as automotive, home living, home repair, sporting goods and clothing. In addition to the retail segment, Canadian Tire operates a Financial Services segment, which offers products such as credit cards and in-store warranties. Canadian Tire also has a significant stake in CT Real Estate Investment Trust, providing further diversification to the company's revenues.

Last quarter, on Feb. 16, the company reported better-than-expected fourth quarter earnings. Earnings per share came in at $3.46, up 15 per cent year-over-year and surpassing the Street's forecast of $3.39 per share. Same store sales growth was impressive, rising 8.1 per cent at Canadian Tire, climbing 10.6 per cent at Mark's, and increasing 5.1 per cent at FGL Sports. The share price rallied 6.9 per cent that day.

The company will be reporting its first quarter financial results before the market opens on May 11. There is seasonality in the company's business with the first quarter typically the weakest quarter. The consensus earnings per share estimate is 97 cents.

Dividend policy

Management has remained committed to returning capital to its shareholders, announcing dividend increases in November for the past three years. Last November, the company announced a 13 per cent increase to its dividend, raising its quarterly dividend to 65 cents per share from 57.5 cents per share. This equates to a yearly dividend of $2.60 per share, or an annualized dividend yield of 1.56 per cent.

The company has also been active with its share buyback program. The company completed its 2016 share purchase intention, repurchasing $550-million of its shares by the end of 2016. Management's 2017 share purchase intention is to repurchase another $550-million of its shares by the end of the year.

Analysts' recommendations

The stock is covered by 14 analysts, of which 11 analysts have buy recommendations and four analysts have hold recommendations.

The 14 firms providing research coverage are as follows in alphabetical order: Accountability Research, Barclays, BMO Capital Markets, Canaccord Genuity, CIBC World Markets, Desjardins Securities, Edward Jones, Morningstar, National Bank Financial, Raymond James, RBC Capital Markets, Scotia Capital, TD Securities, and Veritas Investment Research.

Revised recommendations

Analysts' expectations have been rising with several large positive target price revisions occurring in February. For instance, analyst Brian Morrison from TD Securities raised his target price to $190 from $180. Vishal Shreedhar from National Bank Financial lifted his target price by $20 to $178, and Derek Dley, the analyst from Canaccord Genuity, raised his target price by $24 to $173.

Financial forecasts

The Street is forecasting earnings per share of $10.07 for 2017, up from $9.22 in 2016, with earnings per share anticipated to rise to $11.03 in 2018. Forecasts have been relatively stable, with minor positive revisions. For instance, four months ago, the consensus earnings per share estimates were $9.99 for 2017 and $10.98 for 2018.

Valuation

The stock can be valued using a sum-of-the-parts calculation to account for the distinct business segments.

The average 12-month target price is $174.69, implying the share price has 5 per cent upside potential over the next year. Individual target prices range from a low of $165 to $190. Individual target prices provided by 12 firms are as follows in numerical order: $165, $167, $168, $169, $170, $173, $175, $176, $178, $180, $182, and $190.

Insider transaction activity

There have been no reported buying or selling activities by insiders in 2017.

Chart watch

The share price has experienced a stellar rally, soaring 20 per cent year to date.

Technically, the stock is looking overbought with a relative strength reading of 79. Generally, a reading at or above 70 indicates an overbought condition.

Should the share price retreat, there is downside support around $160, which is close to its 50-day moving average (at $158.24).

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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.

TSX breakouts

Positive BreakoutsMay 2 close
ATD.B-TAlimentation Couche-Tard Inc $63.36
BAM.A-TBrookfield Asset Management Inc $51.79
CAE-TCAE Inc $21.51
CNE-TCanacol Energy Ltd $4.13
CP-TCanadian Pacific Railway Ltd $213.24
CTC.A-TCanadian Tire Corp Ltd $167.17
CU-TCanadian Utilities Ltd $39.70
GIB.A-TCGI Group Inc $66.80
CGX-TCineplex Inc $54.35
CVG-TClairvest Group Inc. $35.50
CCA-TCogeco Communications Inc $79.85
CGO-TCogeco Inc $69.73
CIGI-TColliers International Group Inc $73.24
CMG-TComputer Modelling Group Ltd $11.27
CSU-TConstellation Software Inc $665.85
DSG-TDescartes Systems Group Inc $32.42
DH-TDH Corp $25.44
DIV-TDiversified Royalty Corp $2.70
DOL-TDollarama Inc $121.91
DDC-TDominion Diamond Corp $17.47
FTT-TFinning International Inc $27.20
WN-TGeorge Weston Ltd $123.88
GIL-TGildan Activewear Inc $38.69
GRT.UN-TGranite Real Estate Investment Trust $49.97
HWD-THardwoods Distribution Inc $17.50
KXS-TKinaxis Inc $85.79
L-TLoblaw Cos Ltd $76.99
LMP-TLumenpulse Inc $21.10
MFI-TMaple Leaf Foods Inc $34.51
MRU-TMetro Inc $47.07
NFI-TNew Flyer Industries Inc $51.58
NWC-TNorth West Co Inc $33.41
OGC-TOceanaGold Corp $4.55
ONEX-TOnex Corp $102.36
OTEX-TOpen Text Corp $47.60
AAR.UN-TPure Industrial Real Estate Trust $6.64
PUR-TPure Technologies Ltd. $5.05
QBR.B-TQuebecor Inc $42.25
RCI.B-TRogers Communications Inc $62.97
SIS-TSavaria Corp. $15.14
SJR.B-TShaw Communications Inc $29.44
SHOP-TShopify Inc. $113.94
TOY-TSpin Master Corp. $39.39
SU-TSuncor Energy Inc $43.14
T-TTELUS Corp $45.56
TRP-TTransCanada Corp $64.25
TC-TTucows Inc. $83.04
VCM-TVecima Networks Inc $11.00
VSN-TVeresen Inc $18.35
WCN-TWaste Connections Inc. $127.18
Negative Breakouts
AW.UN-TA&W Revenue Royalties Income Fund $37.72
AC-TAir Canada $12.75
ASR-TAlacer Gold Corp $2.00
ARX-TARC Resources Ltd $17.38
ATH-TAthabasca Oil Corp $1.33
ATA-TATS Automation Tooling Systems Inc $12.45
BMO-TBank of Montreal $95.94
BSX-TBelo Sun Mining Corp $0.58
BNP-TBonavista Energy Corp $2.71
BNE-TBonterra Energy Corp $18.81
CWB-TCanadian Western Bank $26.50
CARA-TCara Operations Ltd $24.95
CJ-TCardinal Energy Ltd $6.25
CVE-TCenovus Energy Inc $13.37
CM-TCIBC $109.12
CNL-TContinental Gold Inc $2.95
CPG-TCrescent Point Energy Corp $12.94
CR-TCrew Energy Inc $4.10
CRH-TCRH Medical Corp $7.91
ERF-TEnerplus Corp $9.72
FC-TFirm Capital Mortgage Investment Corp $12.63
FM-TFirst Quantum Minerals Ltd $12.71
FVI-TFortuna Silver Mines Inc $6.05
GXO-TGranite Oil Corp $5.05
GUY-TGuyana Goldfields Inc $6.07
HWO-THigh Arctic Energy Services Inc $4.64
IMO-TImperial Oil Ltd $39.44
KDX-TKlondex Mines Ltd $4.67
LB-TLaurentian Bank of Canada $55.50
MND-TMandalay Resources Corp $0.56
MKP-TMCAN Mortgage Corp $13.33
MEG-TMEG Energy Corp $6.02
NA-TNational Bank of Canada $52.61
NLN-TNeuLion Inc $0.75
NXE-TNexGen Energy Ltd. $2.92
PGF-TPengrowth Energy Corp $1.26
PEY-TPeyto Exploration & Development Corp $24.30
PTM-TPlatinum Group Metals Ltd $1.61
PD-TPrecision Drilling Corp $5.19
RRX-TRaging River Exploration Inc $7.64
RY-TRoyal Bank of Canada $92.66
SES-TSecure Energy Services Inc $8.72
SCL-TShawCor Ltd $33.62
SPE-TSpartan Energy Corp $2.18
TVE-TTamarack Valley Energy Ltd. $2.48
TXG-TTorex Gold Resources Inc $22.15
TD-TToronto-Dominion Bank $63.70
TOU-TTourmaline Oil Corp $26.58
TFII-TTransForce Inc $28.70
WCP-TWhitecap Resources Inc $9.39

Source: Bloomberg