Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A Pengrowth Energy Corp. pipeline in Alberta. (Ewan Nicholson)

A Pengrowth Energy Corp. pipeline in Alberta.

(Ewan Nicholson)

Schizas’ Mailbag

Pengrowth charts lack promise, but the dividend is sweet Add to ...

Hi Lou,

What is your take on Pengrowth Energy Corp.?

Thanks,

Scott

Hey Scott,

Thanks for the assignment.

This will be the sixth time that I conduct an investigation into the prospects for Pengrowth Energy Corp. The last study was posted on Aug. 28, 2013, on a request from Ramey. The shares were trading for $5.74 and he wanted to know if he should hold or get rid of what he described as a miserable stock. I think we can all relate to that sentiment. The research indicated that a new advance had started with a golden cross forming in July of 2013. It was also observed that there was support along the uptrend line and the 50-day moving average.

More Related to this Story

It was advised that Ramey should hold the stock in an effort to mitigate some of his losses. The analysis proved correct as PGF continued to advance reaching a 52-week high of $7.60 by February of 2014.

Another inspection of the charts will inform my take on PGF.

The three-year chart holds a number of patterns worth examining. The first is the breach of the uptrend line that occurred as the stock pulled back from the 52-week high encountered in February of 2014. The second item worth mentioning is the breach of support along the 50-day moving average that transpired in March. The RSI and the MACD both generated a buy signal in January 2014 as the shares moved up from support at $6.60 to the February high. The momentum indicators then signalled a sell in February leading to a retest of support at $6.60. The stock caught a bounce off of $6.60 but is now meeting resistance along the 50-day moving average.

The six-month chart provides a close-up of the move higher in January and the February top. The resistance along the 50-day moving average is evident as is the neutral signals generated by the RSI and the MACD.

PGF offers a dividend that yields 7.05 per cent which is quite generous but calls into question how sustainable it might be. If you already own the stock, watch that support at $6.60 is maintained. If it doesn’t you will likely test support along the 200-day moving average. If you don’t own PGF it would be wise to wait until there is improved visibility as to trend.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lou@happycapitalism.com.

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular