This week will be an active one with plenty of news for investors to digest. The week starts off quietly and steadily ramps up. There are over 70 companies in the S&P/TSX composite index that have confirmed they will be reporting their quarterly results this week starting with Endeavour Mining Corp., which is reporting its third-quarter results this morning. On Tuesday, Canadian August GDP figures are announced. Thursday will be the most active day of the week in terms of earnings reports with 42 companies in the TSX Index scheduled to release their quarterly results. Finally, announced on Friday is the much anticipated October U.S. non-farm payroll report.
Let's briefly recap what happened on Friday. The S&P/TSX composite index lost ground in the final hour of the trading session, closing the day down by 48 points, or 0.33 per cent to close at 14,785. There were 101 securities in the TSX Index that advanced, 141 securities declined in value, and five stocks closed the day unchanged. The worst sector in the index was healthcare, with shares of Valeant Pharmaceuticals tumbling 8 per cent.
The S&P/TSX composite index is up 0.40 per cent month-to-date, and up 13.65 per cent year-to-date.
On today's TSX Breakouts report, there are very few stocks on the positive breakouts list (stocks with positive price momentum), 15 to be exact, while the number of securities, on the negative breakouts list (stocks with negative price momentum) expanded to 39.
Discussed today is a human resources and employment services stock that continues to climb higher, rising 33 per cent year-to-date with analysts forecasting further gains of between 15 per cent and 20 per cent. Discussed today is People Corp. (PEO-X), listed on the TSX Venture Exchange.
A brief outline is provided below that may serve as a springboard for further fundamental research.
Winnipeg-based People Corp. provides employment services such as employee group benefit consulting, pension consulting, and human resource consulting and recruitment services.
Before the market opened on July 19, the company reported better-than-expected third-quarter fiscal 2016 financial results (the company's fiscal year-end is Aug. 31). Revenue came in at $20.2-million, up from $10.5-million during the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $3.5-million, up from $2.1-million last year, and surpassing the consensus estimate of $3.3-million. The company reported a small net profit. The share price rallied 6 per cent to $3.39 from $3.20 on high volume with over 173,000 shares traded.
In order to fund the company's growth objectives, earlier this month, the company completed a bought deal private placement, raising over $20-million through the issuance of 5,439,500 shares at a price of $3.70 per share.
Management's interests appear aligned with shareholders. According to Bloomberg, insiders hold a 21 per cent interest in the company. Laurie Goldberg, the chief executive officer, holds just under an 11 per cent interest.
Management is focused on growth, both acquisition and organic growth, and as a result, the company currently does not pay its shareholders a dividend.
According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 11 times the fiscal 2018 consensus estimate.
This stock is covered by three firms, they are Acumen Capital, Cormark Securities, and Laurentian Bank Securities. All three analysts covering the company have 'buy' recommendations.
Analysts have been revising their target prices higher over the course of this year. Currently, the average one-year target price is $5, implying there is 18 per cent upside potential over the next 12 months. Individual target prices are quite concentrated, here they are in numerical order: $4.90, $5.00, and $5.10.
The Street is forecasting strong growth for this company. The consensus revenue estimate is $76.6-million in fiscal 2016, rising 35 per cent to $103.1-million in fiscal 2017. In fiscal 2015, the company's revenue grew 15.8 per cent to $49.3-million up from $42.6-million in the previous year, of which 11.4 per cent was acquisition growth and 4.4 per cent was organic growth. The consensus EBITDA estimate is $14-million in fiscal 2016, and $18.7-million in fiscal 2017. The Street anticipates the company will achieve earnings per share of 1 cent in fiscal 2016 and 9 cents in fiscal 2017.
At the start of the year, the consensus revenue estimate was $66.8-million for fiscal 2016 and $69.4-million for fiscal 2017. The Street forecast EBITDA of $12.6-million for fiscal 2016 and $14.1-million for the following year.
Morneau Shepell Inc. (MSI-T) offers its shareholders a monthly dividend of 6.5 cents per share, equating to an annualized dividend yield of 3.6 per cent. On a valuation basis, according to Bloomberg, shares of Morneau Shepell are trading at an enterprise value-to-EBITDA multiple of just under 11 times the 2017 consensus estimate. The Street is forecasting Morneau to realize revenue of $602-million in 2016, increasing over 7 per cent to $648-million in 2017. The consensus EBITDA estimate is $114-million in 2016 and $122-million in 2017, and the consensus EPS estimate is 74 cents in 2016, rising to $1 in 2017.
Year-to-date, the stock price is up 33 per cent, a similar price return to an industry peer, Morneau Shepell, whose share price is up 38 per cent so far this year.
Shares of People have initial overhead resistance around $4.50, its previous closing peak was $4.52 set in June, 2015.
There is downside support at $4, and failing that close to its 50-day moving average (at $3.80). After that, there is support at $3.50, and then around $3.20, near its 200-day moving average (at $3.23).
The relative strength index is 70, suggesting the shares are in overbought territory. Generally, a reading at or above 70 indicates an overbought condition.
This small cap stock, with a market capitalization of $215-million, can be thinly traded, and as a result, the share price can be volatile. On Friday, for instance, the stock price rallied over 6 per cent, on high volume, with over 94,000 shares traded. The two-month historical average daily trading volume is approximately 44,000 shares.
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 indices 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.
Monday's Breakouts List
On the Toronto Stock Exchange
|1||ACR.UN-T||Agellan Commercial REIT||$10.91|
|2||CVL-T||Cervus Equipment Corp.||$13.25|
|3||CSW.A-T||Corby Spirit and Wine Ltd.||$23.98|
|4||CRH-T||CRH Medical Corp.||$6.56|
|5||FM-T||First Quantum Minerals Ltd.||$12.24|
|6||LIF-T||Labrador Iron Ore Royalty Corp.||$14.58|
|7||MAL-T||Magellan Aerospace Corp.||$18.00|
|8||MTY-T||MTY Food Group Inc.||$48.45|
|12||TCK.B-T||Teck Resources Ltd.||$28.21|
|14||TRQ-T||Turquoise Hill Resources Ltd.||$4.18|
|15||WFT-T||West Fraser Timber Co Ltd.||$46.39|
|2||ASR-T||Alacer Gold Corp.||$2.69|
|3||AD-T||Alaris Royalty Corp.||$20.34|
|4||AXY-T||Alterra Power Corp.||$5.61|
|5||AR-T||Argonaut Gold Inc.||$2.72|
|7||ATP-T||Atlantic Power Corp.||$3.12|
|10||BOX.UN-T||Brookfield Canada Office Properties||$26.35|
|11||CAM-T||Canam Group Inc.||$8.61|
|12||CAO-T||Cara Operations Ltd.||$26.76|
|13||CIG-T||Colliers International Group Inc.||$47.81|
|15||DML-T||Denison Mines Corp.||$0.56|
|16||DRM-T||DREAM Unlimited Corp.||$7.01|
|17||FCR-T||First Capital Realty Inc.||$21.41|
|19||GXO-T||Granite Oil Corp.||$5.31|
|20||HBC-T||Hudson's Bay Co.||$16.70|
|21||HSE-T||Husky Energy Inc.||$14.70|
|22||III-T||Imperial Metals Corp.||$4.93|
|23||LAS.A-T||Lassonde Industries Inc.||$199.45|
|24||LAC-T||Lithium Americas Corp.||$0.72|
|25||MDA-T||MacDonald Dettwiler & Associates Ltd.||$76.31|
|26||NFI-T||New Flyer Industries Inc.||$37.44|
|27||PEY-T||Peyto Exploration & Development Corp.||$34.09|
|28||PG-T||Premier Gold Mines Ltd.||$2.87|
|29||P-T||Primero Mining Corp.||$1.87|
|30||PUR-T||Pure Technologies Ltd.||$4.85|
|32||SCC-T||Sears Canada Inc.||$2.65|
|33||ZZZ-T||Sleep Country Canada||$27.28|
|36||TCN-T||Tricon Capital Group Inc.||$8.80|
|37||VRX-T||Valeant Pharmaceuticals Intl. Inc.||$27.21|
|39||YRI-T||Yamana Gold Inc.||$4.58|