In terms of Canadian economic releases, December inflation figures and November retail sales data will be reported on Friday.
In the U.S., there are no scheduled economic releases. The major event will be the presidential inauguration of Donald Trump and his inauguration speech.
Briefly recapping Thursday's performance, all major U.S. stock markets closed in the red. The Dow Jones Industrial Average lost 0.37 per cent, the S&P 500 index fell 0.36 per cent, and the Nasdaq composite index declined 0.28 per cent.
Turning to Canada, the S&P/TSX composite index inched higher by 12 points, or 0.08 per cent. There were 110 securities in the TSX Index that advanced, 136 securities declined in value, and four stocks closed the day unchanged.
Month-to-date, the TSX Index is up 0.80 per cent.
Today's TSX Breakouts report is brief. There are 23 stocks on the positive breakouts list (stocks with positive price momentum) and 10 securities on the negative breakouts list (stocks with negative price momentum).
The security highlighted today may appear on the positive breakouts list sometime in 2017 – Emera Inc. (EMA-T). The stock offers investors a 4.6 per cent yield combined with 15 per cent upside expectations. From a historical perspective, the stock's valuation appears to have room for multiple expansion, and as a result, for the share price to appreciate.
A brief outline is provided below that may serve as a springboard for further fundamental research.
Halifax-based Emera is a utility company with investments in electricity generation, transmission, and distribution, as well as gas transmission and utility energy services. Management targets between 75 per cent and 85 per cent of its adjusted earnings will come from its rate-regulated businesses.
After the market closed on Nov. 7, the company reported better-than-expected third-quarter financial results. Adjusted earnings per share (EPS) excluding the TECO Energy acquisition costs came in at 73 cents, surpassing the consensus estimate of 57 cents. The share price was relatively unchanged the following day, rising by a penny.
Emera pays its shareholders a quarterly dividend of 52.25 cents per share, or $2.09 on a yearly basis. This equates to an annualized dividend yield of 4.6 per cent.
Looking back to 2007, the company has announced a dividend increase every year.
Management is committed to its dividend policy and targets an 8 per cent dividend growth rate per year through 2020, and is confident that the company's strong operating cash flows will enable the company to achieve this objective.
Based on 2018 earnings, the shares are trading at a P/E multiple of 15.2 times the consensus estimate, which is close to its five-year historical low (at 15.0 times), and below its five-year average P/E multiple of 17.8 times. Over the past five years, the stock has traded in a forward P/E multiple range of between 15 times and 20 times.
If the P/E multiple were to expand to 16.8 times the 2018 consensus estimate, a discount to its five-year historical average (at 17.8 times) given expectations of a rising interest rate environment, this would equate to a share price slightly under $51, over 10 per cent above the current share price.
Analysts have target prices that range from a low of $45 to a high of $61. Individual target prices supplied by 14 firms are as follows in numerical order: $45, $48, two at $50, three at $51, $51.50, $52, $53, $55, $57, $58, and $61. The average one-year target price based on analysts' forecasts is $52.77, suggesting the shares can realized a potential price return of 15 per cent over the next 12 months.
According to Bloomberg, Emera is covered by 17 analysts. Since the beginning of December, 14 analysts have issued research reports of which eight analysts have 'buy' recommendations and six analysts have 'hold' recommendations.
The consensus EPS estimate is $2.45 in 2016, and is expected to rise 11 per cent to $2.72 in 2017. The Street is forecasting EPS to climb another 11 per cent to $3.02 in 2018.
Earnings revisions have been modest. For instance, one year ago, the consensus EPS estimates were $2.39 for 2016 and $2.78 for 2017. Halfway through last year, on July 1, the consensus EPS forecasts were $2.45 for 2016 and $2.78 for 2017.
Insider transaction activities
On Dec. 19, Scott Balfour, the chief operating officer, purchased 3,000 shares. The following day, he acquired an additional 2,100 shares at a price of $45 per share.
Year to date, the share price is up 1 per cent.
In 2016, the stock was a laggard within the S&P/TSX composite utilities sector index with the share price rising just 5 per cent to $45.39 from $43.23. The share price recently broke out of a downtrend that had been in place since July 2016. That being said, while the stock chart has improved, it appears neutral, not yet bullish, with the share price trading between its 50-day and 200-day moving averages.
The share price has initial overhead resistance around $47, close to its 200-day moving average (at $46.79), and after that around $48.50, and then at $50. There is initial downside support between $44 and $45. Failing that, there is support around $42.50, and solid support around $40.
The relative strength index reading is at 62, suggesting the shares are in neutral territory, neither overbought nor oversold.
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
|Positive Breakouts||Jan. 19 close|
|ACR.UN-T||Agellan Commercial REIT||$11.47|
|BPF.UN-T||Boston Pizza Royalties Income Fund||$22.99|
|CFX-T||Canfor Pulp Products Inc||$10.69|
|CHP.UN-T||Choice Properties REIT||$13.82|
|HGN-T||Halogen Software Inc||$10.19|
|HWO-T||High Arctic Energy Services Inc||$5.95|
|LNF-T||Leon's Furniture Ltd.||$18.33|
|LAC-T||Lithium Americas Corp||$1.06|
|MST.UN-T||Milestone Apartments REIT||$21.60|
|PAA-T||Pan American Silver Corp||$24.32|
|PG-T||Premier Gold Mines Ltd||$3.07|
|RME-T||Rocky Mountain Dealerships Inc||$10.71|
|SMT-T||Sierra Metals Inc||$2.20|
|TKO-T||Taseko Mines Ltd||$1.67|
|TNC-T||TIO Networks Corp.||$3.25|
|CR-T||Crew Energy Inc||$6.15|
|HWD-T||Hardwoods Distribution Inc||$16.68|
|PXT-T||Parex Resources Inc||$14.79|
|PEY-T||Peyto Exploration & Development Corp||$29.51|
|RBA-T||Ritchie Bros Auctioneers Inc||$41.99|
|SCC-T||Sears Canada Inc||$2.06|
|SPE-T||Spartan Energy Corp||$2.88|