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The building of work camps is favoured by local municipalities, which would prefer to see workers move to the oil sands rather than fly in and fly out. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)
The building of work camps is favoured by local municipalities, which would prefer to see workers move to the oil sands rather than fly in and fly out. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)

Schizas' Mailbag

Horizon North Logistics a case of buy high, sell higher Add to ...

Hi Lou,

What do you think of Horizon North Logistics, the provider of many things to the oil sands?

When construction is on the up would this be a good buy?

Thank you,

Barry



Hey Barry,

Thanks for the assignment. Horizon North Logistics Inc. has had quite the run as it has grown with expanding resource development in Canada’s north. The company provides camp, catering, and marine services. In addition they operate a division that offers matting solutions for roads, drill sites, and work camps. The top revenue generator is the camp and catering segment. All of the services provided to their clients operating in the Alberta oil sands account for 61 per cent of revenue. They don’t call it Fort McMoney for nothing!

More related to this story

A review of the charts will assist in determining if HNL is a buy.

The three-year chart is proof positive that you can make a lot money in the markets. The trick is finding those gems that run from approximately $0.50 to the $6.00 range over a thirty-six month period. The question then, is this a case of buying high to sell higher? Currently the RSI indicates that the shares are overbought and the MACD has turned lower. In addition resistance has surfaced in at $6.00.

The six-month chart provides a close-up of the factors in play. The overbought situation and the MACD crossing below the signal line. However, given the trend in play it looks like that these are signals of a pull back not a trend reversal. The company is expected to report first-quarter 2012 results on or near May 3, 2012 which is the next significant flex point on the calendar. I like the story.

With the extreme need for camp and catering services in and around the oil sands and the anticipated further growth in the sector this one looks like the type of stock you want to own. The 3.3 per cent dividend yield is a further inducement to accumulate a core position in HNL.

Make it a profitable day and happy capitalism!

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

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