Hi Lou,
I would like to ask your opinion of Badger Daylighting at these levels. I'm considering purchasing a small position for 12-to 18-months.
Thank you,
John
Hey John,
Funny you should bring up this company. Mike, a listener at Talk Radio AM640, is considering working for the company and he was asking about them as well. Badger Daylighting Ltd. (BAD-T) is a Calgary based company that provides non-destructive hydrovac excavation services. BAD serves the oil and gas, power, municipal, transportation, industrial, and commercial construction industries.
The company enjoyed a great run over the last few years but has had to deal with some headwinds. The pull-back must be what has you wondering if now would be a good time to buy. A look at the charts will help identify the opportunities and risks associated with BAD.
The three-year chart was as pretty as a picture until late March of 2014 when it hit a 52-week high of $43.66. Since then a trend reversal has taken hold with the stock breaching support along the 50– and 200-day moving averages. The MACD and the RSI both signalled that selling pressure was taking the steam out of the advance as we moved into April. Currently, the shares are attempting to build support near $28.00 but the death cross that surfaced in August should not be ignored.
The six-month chart highlights the new downtrend that has been established and the big drop in August as the company released disappointing second-quarter results. When a stock is carrying a high multiple it has to beat the street to continue to feed the expectations monster. In this case the failure to deliver has had the expected outcome. The momentum indicators both generated sell signals in April and August although you really had to be on your game to avoid the whip in August.
The research conducted isn't generating enough evidence to support a buy. There is scant indication that this retreat has finished. You would best be served putting BAD under surveillance and watch for base building at these levels or a better entry point at lower valuations.
Make it a profitable day and happy capitalism!
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