Your opinion on CDL.A-T.
Thanks for the assignment.
Corby Distilleries Ltd. currently controls 23 per cent of spirit sales in Canada through its portfolio of 25 brands that includes Wiser’s Canadian Whisky, Polar Ice Vodka, and Lamb’s Rum. The company is controlled by Pernod Ricard and has distribution agreements for a selection of its brands as well as distribution deals with vintners. The stock offers a 3.426 per cent dividend yield and some portfolio managers think that there could be a special dividend issues at some point.
There is also some speculation that the parent company may want to own all of the shares. The company has two classes of common shares that are identical except that the A shares hold voting rights. The view is that changing the structure would be complex and costly for little real benefit.
An investigation of the charts will help determine how best to proceed with the shares of CDL.A.
The three-year chart indicates that the shares have pulled back from the 52-week high of $21.25 which it hit on May 14, 2013. What you need to keep in mind is that CDL.A is a thin trading stock. The average daily volume is only 7,239 shares. Since May 15 it has only traded above the average on one day. In order for a stock to run higher buyers need to be bidding it up. Since May 8, 2013, volume has only been better than average on one day which would suggest that sellers have taken control of the market.
The six-month chart did provide some indications that the shares were about to move lower. The RSI and the MACD both generated sell signals as we approached May 14. Currently the momentum indicators are neutral at best although there does seem to be some base building in the $19.75 range.
Given the substantial market share that the company enjoys in the spirits business, the dividend yield, and potential to drive sales in the United States, CDL.A is an accumulate. Pick away at this one and build a position.
Make it a profitable day and happy capitalism!
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