Jeff Parent is vice-president and portfolio manager at Matco Financial. His focus is technical analysis.
CanElson Drilling (CDI TSX)
CDI has a solid client base, its fleet consists of newer and deeper rigs compared to its peers, and increased drilling activity will lead to higher utilization rates. Good buying point, testing support now. Bullish pattern breaks down at $7.50.
Lumenpulse (LMP TSX)
Lumenpulse IPO’d in April at $16. The company manufactures LED equipment in an emerging industry and a positive regulatory environment. Generating positive earnings in Q3 2014 provides a near-term catalyst. Early chart formation may be the beginning of a longer term upwards trend. At $20, reduce and sell at $19.
Saputo (SAP TSX)
Recent acquisition in Australia provides access to new markets. Actively seeking suitable acquisitions in new markets and tuck-ins in existing markets. Nice breakout and little or no pullback this month bodes well. Begin reducing at $61.
Past Picks: Feb. 3, 2014
Hardwoods Distribution (HWD TSX)
Then: $9.98; Now: $11.15 +11.72%; Total return: +12.20%
CCL Industries (CCL.B TSX)
Then: $79.46; Now: $103.16 +29.83%; Total return: +30.48%
Raging River Exploration (RRX TSX)
Then: $6.77; Now: $10.80 +59.53%; Total return: +59.53%
Total return average: +34.07%
The large energy weighting in the S&P/TSX composite index caused Canada to lag the U.S. from August, 2011 to April, 2013. Since then, increases in energy prices have brought us back in line with the U.S. We continue to be bullish on natural gas. Storage levels heading into next winter are low, and the sector has also gained some strength from the higher oil prices. We expect this will cause outperformance of Canadian over U.S. markets to the end of the year. Technicals may cause a summer pullback, but this should be muted. Bonds continue to perform well given the recent data showing weaker than expected Q1 GDP.