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Derek Evans, president and chief executive officer of Pengrowth, addresses shareholders at the company’s annual general meeting in Calgary in this May 11, 2010, file photo. (TODD KOROL/REUTERS)
Derek Evans, president and chief executive officer of Pengrowth, addresses shareholders at the company’s annual general meeting in Calgary in this May 11, 2010, file photo. (TODD KOROL/REUTERS)

SCHIZAS’ MAILBAG

I wish I'd sold Pengrowth last year. Should I sell now? Add to ...

I was a holder of NAE-T, which merged with Pengrowth. I made a mistake by not getting rid of it at that time. I was lured by the dividend paid on the stock. At this point I don’t know what to do. Get rid of it or hold this miserable stock? Ramey

Thanks for the assignment. This will be the fifth time that I examine the case for Pengrowth Energy Corp. The last was on March 26 on a request from Nick. The shares were trading for $5.28 and he wanted to know what I thought of the situation.

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The research conducted on his behalf indicated the stock had caught a bounce off its 52-week low of $3.93, but had met resistance along the 200-day moving average. The momentum indicators signalled there was some selling pressure to deal with and to watch for support at $5 to hold before committing capital. Retrospectively, that was the right call as Pengrowth pulled back to $4.60 by late April. From there the stock began a new advance.

Another run at the charts will add additional texture to your decision on how to proceed with your position.

The three-year chart illustrates what was observed back in March. The stock had finally broken out of the relentless decline that started in 2011. Since the last case study shares of Pengrowth have broken above the 50- and 200-day moving averages and established a new uptrend. Make note of the golden cross that surfaced in July, which generally signals there is more to come as buyers have taken control of the market.

The six-month chart indicates that although shares have pulled back from the July high of $6.20 they are finding support along the 50-day moving average. When a stock is in an uptrend it is seen as a good sign when it tests support along its trend line and its moving averages. It implies that buyers are willing to step up on a pullback. The RSI and the MACD both signalled a buy in early July as the stock moved off of $5.

At this time I would not recommend selling. With a new uptrend in play, and the stock finding support along the trend line and the 50-day moving average, it would be in your interest to stay on this ride and recover some of your losses. The trend is your friend until it ends and right now the trend is up.

Make it a profitable day and happy capitalism!

 
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