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An employee pulls out a live lobster from the holding tank at the Clearwater Seafoods store on the Bedford Highway in Halifax in this file photo taken onNovember 12, 2007. (Paul Darrow/For The Globe and Mail/Paul Darrow/For The Globe and Mail)
An employee pulls out a live lobster from the holding tank at the Clearwater Seafoods store on the Bedford Highway in Halifax in this file photo taken onNovember 12, 2007. (Paul Darrow/For The Globe and Mail/Paul Darrow/For The Globe and Mail)

Schizas’ Mailbag

Clearwater Seafoods begins a pullback Add to ...

Hi Lou,

I always value your opinion. Could you have a look at Clearwater Seafoods ?

Thanks Lou!

Mario

Hey Mario,

Thanks for your kind words and for the assignment.

Clearwater Seafoods Inc. is a micro-cap company that specializes in supplying the global market with the highest quality shellfish and seafood products with their fleet of vessels and processing plants. The shares have traded as high as $12.50 back in 2004 and as low as $0.60 in 2009. The recent run that started in late 2010 at $0.84 has proven very profitable for investors who caught the ride along the way. The move off of $2.50 in early November of 2012 started before the Nov. 13, 2012, release of third-quarter results that beat the street. Keep in mind that there are only two analyst that follow the stock.

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A review of the charts will inform my discussion of the case for CLR.

The three-year chart indicates that the November advance was signalled by the MACD and RSI. In July of 2012 a golden cross surfaced calling attention to the shares for investors who include technical analysis as part of their evaluative process. What is also evident at this point is that the MACD and RSI are indicating that CLR is overbought and the pull back that started on Jan. 21, 2013, when the stock hit it’s 52 week high at $5.30 shouldn’t have come as a surprise.

The six-month chart provides a close-up of the overbought condition that just came to a end and the struggle to get the momentum focused on a return to an uptrend. Currently the risk of a pullback outweighs the opportunity of a further advance. The upside always takes care of itself – its the downside you have to protect.

What you need to consider when evaluating the shares of CLR is that it is a micro-cap, it has thin street coverage, and the average daily volume over the last 3 months is 83,073 shares. The question I am asking is if there are any buyers left? The company will report fourth quarter in March where we will have more of our questions answered.

If you think you have a growth story with pricing power then put CLR on your watch list and see how it trades ahead of the fourth-quarter release.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

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