Wednesday’s TSX breakouts: This newly listed stock has 9 ‘buy’ recommendations and 33% upside forecast

Last week, the price of oil was volatile.

This week, it's the price of gold that is turbulent, tumbling 3 per cent and breaking below $1,300 an ounce (U.S.) on Tuesday as the U.S. dollar gained strength.

Major U.S. markets dipped but it was the Canadian benchmark index that took the brunt of the damage.

In the U.S., the Dow Jones Industrial Average declined 0.47 per cent on Tuesday. The S&P 500 Index sank 0.50 per cent, and the Nasdaq composite declined 0.21 per cent.

In Canada, the S&P/TSX composite index lost 168 points, or 1.14 per cent to close at 14,521. There were 55 securities in the TSX Index that advanced, 189 securities declined in value, and three stocks closed the day unchanged.

The S&P/TSX composite index is up 11.61 per cent year to date.

On today's TSX Breakouts report, there are 22 securities on the positive breakouts list (stocks with positive price momentum), and a concerning 80 securities on the negative breakouts list (stocks with negative price momentum).

There are themes of weakness. For instance, of the 80 names on the negative breakouts list, 40 per cent of the securities are precious metals, gold, and silver stocks, and 14 per cent are real estate investment trusts. In addition, asset managers, food retailers, and forest products stocks are under pressure.

Discussed today is a stock that has yet to appear on either the positive or the negative breakouts list as shares just began trading on the Toronto Stock Exchange. However, it is one many investors may already be familiar, and ten firms just launched coverage on it over the past week. The security highlighted today is ECN Capital Corp. (ECN-T).

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

The company

On October 3, Element Financial Corporation completed its reorganization, splitting into two companies, Element Fleet Management Corp. (EFN-T) and ECN Capital Corp. (ECN-T).

ECN Capital provides financing across three core business segments: rail, commercial aviation, and commercial and vendor.

Dividend policy

The company pays its shareholders a quarterly dividend of 0.01 cents per share, or 4 cents on a yearly basis. This translates to a dividend yield of 1.2 per cent.

Valuation

Analysts commonly value the stock on a price-to-book value basis. The average one-year target price is $4.49, which implies 33 per cent upside potential over the next 12 months. Target prices range from a low of $4 to a high of 5.50. Target prices in numerical order are as follows: two at $4, three at $4.25, $4.40, $4.50, $4.80, $5, and $5.50.

Analysts' recommendations

According to Bloomberg, this newly listed stock with a market capitalization of $1.3-billion, has coverage from 10 firms: Barclays, BMO Capital Markets, CIBC World Markets, Cormark Securities, Credit Suisse, GMP, National Bank Financial, RBC Capital Markets, Scotia Capital, and TD Securities. There are nine 'buy' recommendations, and one 'hold' recommendation.

The consensus revenue estimate is $224-million in 2016, and forecast to rise to $241-million in 2017. The Street is forecasting earnings per share of 29 cents in 2016, and 34 cents in 2017.

Chart watch

Given its limited trading history, no assessments can be made at this time.

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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 indices 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.