This analysis of Pembina Pipeline Corp. (PPL) will conclude the assignment from Lorenzo. He was interested in PPL in comparison to Inter Pipeline Ltd. (IPL).
This will be the fourth time since 2011 that I have inspected the charts for PPL. The last occasion was on April 4, 2014 on a request from Don. The stock was trading for $41.75 and the dividend produced a yield of 4.02 per cent. The research identified a number of factors pointing to a continuation of the five-year uptrend despite the shares being overbought and meeting some resistance at $42.00.
The long advance had seen the stock build support at various prices and along the 50-day moving average. It was advised that investors might expect a pullback, but there were no indications of a serious retreat. In hindsight, that was the right call as the shares continued to climb reaching a 52-week high of $53.04 in September of 2014. Unfortunately, PPL has been yet another casualty of the decline in energy prices that has wreaked havoc on every corner of the industry.
An audit of the charts will enable the comparison with IPL and help determine which might be best positioned to host your hard-earned capital.
The three-year chart portrays a stock that has broken below its uptrend line as well as breaching support along the 50 and 200-day moving average. The MACD and the RSI both generated sell signals in September as the shares had become overbought. One also has to respect the death cross that surfaced in December of 2014 which indicates weakness in buyer's intent.
What is also observable is the range-bound pattern that has emerged since December with support at $37.00 and resistance at $42.00. Finally, PPL will have to break above resistance along the 200-day moving average with conviction if a new up leg is to be sustained.
The six-month chart isn't providing many indications that PPL is on the verge of a move higher. The best that can be said at this point is that the downtrend has been broken and the stock is moving sideways in a range-bound pattern. The dividend yield on PPL is 4.18 per cent which you will have to consider as part of your final decision on how best to proceed.
From a technical perspective when comparing the PPL and IPL, it appears that Inter Pipeline Ltd. is showing better posture.
Next time I will investigate the potential for Synodon Inc. (SYD TSXV) for Brian.
Make it a profitable day and happy capitalism!
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