Today, there are 7 stocks on the positive breakouts list, six of which are from the TSX Small Cap Index, and 13 stocks on the negative breakouts list, six of which are financial stocks and five are consumer discretionary stocks.
One stock on the negative breakout list that appears oversold is Laurentian Bank (LB-T). A brief overview is provided below that may serve as a springboard for further research.
On Dec. 9, Laurentian Bank reported fourth-quarter results that missed the Street's expectations, reporting earnings per share of $1.44 below the consensus estimate of $1.46. In addition, management announced a 7-year transformation growth plan aimed at improving the company's profitability. Management is targeting return on equity to exceed 14 per cent in four years, up from 12 per cent reported in 2015. To fund its growth objectives, the company announced a bought deal financing, offering 1.25 million shares at $52 per share, raising $65-million, and sending the stock price down 3.6 per cent. The stock price has since continued in a downtrend.
Management announced two dividend hikes in 2015, one in June and another in December. Last month, management announced it was raising its quarterly dividend by 3.6 per cent to 58 cents per share up from 56 cents. The annual dividend is $2.32, equating to an annualized yield of 4.8 per cent.
The downside may be limited as the stock price is currently trading slightly below its historical averages. The shares are trading at a price-to-earnings (p/e) multiple of 8 times the 2017 consensus earnings estimate. The stock's three-year historical forward p/e multiple is 8.2 times, and its five-year historical p/e multiple is 8.3 times.
According to Bloomberg, there is one analyst with a buy recommendation, seven analysts with hold recommendations, and two with sell recommendations. The average one-year target price is $53.33, implying a potential one-year price return, not including the dividend yield, of 10 per cent. Price targets range from a low of $48 to a high of $56. Individual price targets are as follows: $48, $50, $51, $52, three at $54, $55, and two at $56.
In 2015, the company reported adjusted earnings per share of $5.62, up 6 per cent year-over-year. The consensus earnings per share estimate is forecast to rise slightly to $5.74 in 2016, and the following year, the Street is expecting earnings to rise 5 per cent to $6.03.
The stock price has fallen 13 per cent since its close on Dec. 1, underperforming the big 5 banks. During this period, shares of CIBC plunged 10 per cent, Bank of Nova Scotia shares declined 8 per cent, Royal Bank of Canada shares dropped nearly 4 per cent, TD Bank shares lost 2 per cent, and the Bank of Montreal shares were relatively unchanged, down a few pennies.
Shares of Laurentian Bank have downside support around $48, and failing that around $47. During the market meltdown in August, the stock price fell to $45.44. There is upside resistance at $49.50, where its 200-day moving average lies.
The relative strength index is at 28, suggesting the shares are oversold. Generally, a reading at or below 30 indicates an oversold condition.
As always, I strongly encourage readers to consult a financial advisor, and to do their own proper due diligence before taking any investment action.
Below is a list of stocks in the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows.
|7 Positive Breakouts|
|EIF-T||Exchange Income Corp|
|MSL-T||Merus Labs International Inc|
|NFI-T||New Flyer Industries Inc|
|WEF-T||Western Forest Products Inc|
|13 Negative Breakouts|
|ATA-T||ATS Automation Tooling Systems Inc|
|CCA-T||Cogeco Cable Inc|
|EQB-T||Equitable Group Inc|
|FCR-T||First Capital Realty Inc|
|LIF-T||Labrador Iron Ore Royalty Corp|
|LB-T||Laurentian Bank of Canada|
|MG-T||Magna International Inc|
|PSG-T||Performance Sports Group Ltd|
|REI.UN-T||RioCan Real Estate Investment Trust|
|TCN-T||Tricon Capital Group Inc|