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the prices of natural resources such as oil have increased sharply since 2002. But according to Statistics Canada’s estimates, 'multifactor productivity' in the mining, oil and gas extraction sector has fallen by a third since 2002. (Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)
the prices of natural resources such as oil have increased sharply since 2002. But according to Statistics Canada’s estimates, 'multifactor productivity' in the mining, oil and gas extraction sector has fallen by a third since 2002. (Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)

Schizas’ Mailbag

Veresen needs to overcome resistance Add to ...

Hi Lou,

I would appreciate your thoughts and comments on Veresen Inc.

Many thanks,

Len

Hey Len,

Thanks for the assignment.

Veresen Inc. operates three divisions in the energy sector: pipeline transportation, midstream assets that gather and extract natural gas liquids from wet gas and power generation. The dividend is quite generous at 7.62 per cent and a number of money managers have called into question if the distribution is sustainable and if sustainable there are questions about the ability to increase the dividend given price weakness for natural gas and liquids.

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A review of the charts will provide further insight into how best to manage this asset.

The three-year chart outlines a stock that enjoyed a robust and lengthy advance that started in March of 2009 as it caught a bounce off the post-financial crisis lows but breached the uptrend line in March of 2012 as it came off a 52-week high of $15.83 in January. By May the shares had broken below the 50- and 200-day moving averages on its way to the 52-week low of $11.67 on June 28, 2012. The shares formed a double bottom as it bounced off support at $11.50 and started an advance that has taken it to the Oct. 12, 2012 close of $13.11.

Worth mentioning are the strong buy signals generated by the MACD and RSI in June. Today the question that VSN must answer is, can it now overcome the resistance that comes in at $13.50 and the 200-day moving average?

The six-month chart isn’t providing much guidance as to the potential direction of the stock. The MACD is neutral at best and the RSI isn’t suggesting that investors are excited about the stock. If you are thinking of buying at this level I would suggest that you might be best served to see VSN move through $13.50 with conviction and hold support at that level before jumping in.

If you already own the shares then you have to watch it every single day for information from the datasphere and the charts to confirm that your dividend is secure.

Make it a profitable day and happy capitalism!

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

 
Security Price Change
VSN-T Veresen Inc. 16.49 0.03
0.182 %
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