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Monday’s TSX breakouts: A trust yielding 7.5% with five distribution hikes announced since January 2016 Add to ...

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On Friday, in the U.S., the Dow Jones Industrial Average fell 0.10 per cent, the S&P 500 index lost 0.13 per cent, while the Nasdaq composite index was unchanged.

Turning to Canada, the S&P/TSX composite index retreated 72 points, or 0.46 per cent. The majority of stocks closed with losses.

Distribution policy

The Trust pays unitholders a monthly distribution of 6.44 cents (Canadian) per unit, or 77.28 cents per unit on a yearly basis. This equates to an annualized yield of 7.5 per cent.

The company is committed to returning capital to its unitholders. So far in 2017, management has already announced one distribution increase. In 2016, management announced four distribution hikes, in January, April, July and October.

The distribution appears sustainable with room to grow. In 2016, the payout ratio was 58.1 per cent.

Management indicated in their quarterly earnings investor presentation that further distribution increases are anticipated in 2017.

Analysts’ recommendations

According to Bloomberg, four analysts have issued research reports since the beginning of the year, of which three analysts have ‘buy’ recommendations, and one analyst has a ‘sector perform’ recommendation.

The four firms providing recent research coverage are as follows in alphabetical order: Canaccord Genuity, Desjardins Securities, National Bank Financial, and RBC Capital Markets.

Valuation

Crius Energy Trust is valued on an enterprise value-to-EBITDA basis. The average one-year target price is $12, which implies the unit price can potentially increase 16 per cent over the next 12 months. Individual price targets are as follows in numerical order: $11, $11.50, $12, and $13.50.

Financial forecasts

The Street is forecasting EBITDA of $65-million (U.S.) in 2017, rising 12 per cent to $73-million (U.S.) in 2018.

Financial expectations have been relatively stable. For instance, four months ago, the consensus EBITDA estimates were $63.8-million (U.S.) for 2017 and $72-million (U.S.) for 2018.

Chart watch

The unit price is in an uptrend, rising 22 per cent year-to-date. If this small cap utility stock, with a market capitalization of $261-million, was included in the TSX composite index, it would be the top performing security in the utility sector so far this year.

Yet, from a longer-term perspective, the unit price has offered investors little price returns. In 2012, the initial public offering price was $10. The unit price declined throughout 2013 and into 2014, stabilized, and began recovering in early 2015. Now, the unit price is finally trading back to where it was initially offered.

For now, the positive price momentum remains intact. Last month, the units experienced a bullish ‘golden cross’ pattern with the 50-day moving average crossing above the 200-day moving average.

Also supportive was Friday’s trading action. The unit price closed at a record high, rising 3 per cent on high volume. Over 488,000 units traded, well above the three-month historical daily average trading volume of approximately 158,000 units.

Should the positive price momentum continue, the unit price could rally to around $12.

Should the price momentum recede, on a pullback, there is strong technical support around $9, which is close to its 50-day moving average (at $9.36) and its 200-day moving average (at $8.71).

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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.

TSX breakouts

Positive BreakoutsMarch 20 close
AQN-TAlgonquin Power & Utilities Corp $12.55
AP.UN-TAllied Properties REIT $36.55
AYA-TAmaya Inc $20.26
HOT.UN-TAmerican Hotel Income Properties REIT LP $10.84
ATP-TAtlantic Power Corp $3.56
BDT-TBird Construction Inc $9.91
BOX.UN-TBrookfield Canada Office Properties $31.75
CARA-TCara Operations Ltd $27.05
CHE.UN-TChemtrade Logistics Income Fund $19.22
CSU-TConstellation Software Inc $655.92
KWH.UN-TCrius Energy Trust $10.31
EMP.A-TEmpire Co Ltd $18.57
ENGH-TEnghouse Systems Ltd $62.63
FSV-TFirstService Corp $78.20
BUS-TGrand West Transportation Group Inc. $3.45
LUG-TLundin Gold Inc $6.31
MAL-TMagellan Aerospace Corp $18.94
MBT-TManitoba Telecom Services Inc $40.01
NWC-TNorth West Co Inc $30.67
NWH.UN-TNorthWest Healthcare Properties REIT $10.76
ONEX-TOnex Corp $98.60
PKI-TParkland Fuel Corp $28.45
PBL-TPollard Banknote Ltd. $9.75
PBH-TPremium Brands Holdings Corp $79.46
QBR.B-TQuebecor Inc $40.45
RVX-TResverlogix Corp $2.41
SHOP-TShopify Inc. $89.14
TOY-TSpin Master Corp. $37.89
TF-TTimbercreek Financial Corp. $9.46
RNW-TTransAlta Renewables Inc $15.85
TCL.A-TTranscontinental Inc $24.12
WDO-TWesdome Gold Mines Ltd. $4.34
Negative Breakouts
AXY-TAlterra Power Corp. $4.81
ACQ-TAutoCanada Inc $21.80
PXX-TBlackPearl Resources Inc $1.30
BNP-TBonavista Energy Corp $3.24
CJ-TCardinal Energy Ltd $6.85
CIX-TCI Financial Corp $26.66
CR-TCrew Energy Inc $4.78
DII.B-TDorel Industries Inc $31.10
ERF-TEnerplus Corp $10.76
GH-TGamehost Inc $10.98
HRX-THeroux-Devtek Inc $12.33
LNF-TLeon's Furniture Ltd. $16.85
MND-TMandalay Resources Corp $0.60
NAL-TNewalta Corp $2.18
PPY-TPainted Pony Petroleum Ltd $5.68
PHX-TPHX Energy Services Corp $3.63
PLZ.UN-TPlaza Retail REIT $4.85
PUR-TPure Technologies Ltd. $3.97
RME-TRocky Mountain Dealerships Inc $9.40
SNC-TSNC-Lavalin Group Inc $52.33
X-TTMX Group Ltd $67.98
TOG-TTORC Oil & Gas Ltd $6.63
TOT-TTotal Energy Services Inc $13.05
TOU-TTourmaline Oil Corp $28.77
TA-TTransAlta Corp $7.03
TFII-TTransForce Inc $30.73
TGL-TTransGlobe Energy Corp $1.95
WRG-TWestern Energy Services Corp $2.27
XDC-TXtreme Drilling & Coil Services Corp $2.11

Source: Bloomberg/Jennifer Dowty

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Follow on Twitter: @jennifer_dowty

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