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Schizas’ Mailbag

Enterprise Group has lots of room to run Add to ...

Good morning Lou,

Have you been following Enterprise Group? If so, any thoughts for the next year or so?

Joyce

Hey Joyce,

Thanks for the assignment.

In most cases when asked to conduct a study on a stock it is very likely that it is the first time I have taken notice of the company. So thanks very much for bird dogging Enterprise Group Inc. out from under cover for a thorough examination.

The company is a consolidator of construction services companies in Western Canada with a focus on clients in the energy, utility, and transportation sectors of the economy. When private companies are rolled up there are immediate savings that go right to the bottom line. Plus there is the added benefit of a wider asset base that can be leveraged for growth. The challenge with a consolidation strategy is to make all the moving parts work in concert.

In terms of a one-year outlook I am not able to help you in that regard. I can help identify the trend, support, and resistance that appear on the charts which will form the basis of the evaluation.

The three-year chart indicates that the stock started a generous advance in October of 2011 when it was trading at a rock bottom price of $0.10. The golden cross that surfaced in March of 2012 was followed by a break above resistance at $0.15 in September of 2012 setting the stage for additional gains. In January of 2013 the move through resistance at $0.25 indicated that there was more gas in the tank. From bottom to top E has to stand for excellent!

The six-month chart depicts the support that the stock has enjoyed along the uptrend line and the 50-day moving average. An examination of the long-term chart suggests that no serious resistance comes in until $0.89. Don’t shoot this running horse.

Make it a profitable day and happy capitalism!

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

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