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Neil Manning, President and Chief Executive Officer of Wajax Income Fund stands in front of a group of parked large Hitachi excavators at one of the company locations in Milton, Ontario, Canada. (Deborah Baic/The Globe and Mail)
Neil Manning, President and Chief Executive Officer of Wajax Income Fund stands in front of a group of parked large Hitachi excavators at one of the company locations in Milton, Ontario, Canada. (Deborah Baic/The Globe and Mail)

Schizas’ Mailbag

Wajax Corporation has broken the downtrend Add to ...

Hi Lou,

Any thoughts on WJX ? I am over 60, and a dividend investor with some patience.

Phil

Hey Phil,

This will be the second time that I investigate the case for Wajax Corporation.

The last occasion was on October 19, 2011, on a request from Andrew. The shares were trading for $32.12 and the dividend yield was 6.7 per cent. Andrew wanted to know if the stock would be a good choice to add to a portfolio. The research conducted on his behalf indicated that the stock had been selling off since May of 2011 and had established a downtrend with resistance along the 50-day moving average. The stock had caught a bounce in early October after a steep and sudden drop and the question that remained to be answered was if there was more to the bounce.

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It was advised to put the stock on his watch list in anticipation of the release of third-quarter 2011 results in November of 2011 which could better define if a new sustained uptrend was setting up. As things developed the stock established a new advance after the third-quarter results beat the street. The shares continued to run to an all time high of $51.15 on May 28, 2012, but that was as good as it got.

Another study of the charts will help inform my thoughts on WJX.

The three-year chart illustrates the retreat that has plagued the shares of WJX since May of last year. The stock retreated all the way back to its 52-week low of $29.38 on June 25, 2013 where it caught a bounce. Currently the advance has met resistance along the 200-day moving average and the question we need answered is if there is enough buying to keep moving the price higher.

The six-month chart depicts the resistance that has been in play along the 200-day moving average since July. The MACD and the RSI both generated a buy signal in June as the stock bounced off the 52-week low. Currently the momentum indicators are suggesting that there is more to the advance.

As a dividend investor with patience you might want to start taking advantage of the trading opportunities presented by WJX. Alternatively you can hold the shares and enjoy your 6.645 per cent yield.

Make it a profitable day and happy capitalism!

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

 

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