Monday’s TSX breakouts: All analysts who cover this undervalued dividend stock say buy

The number of stocks on the positive breakouts list (stocks with positive price momentum) continues to grow and is now up to 87 companies, as the S&P/TSX composite index staged its seventh consecutive day of gains on Friday. The Index has rallied nearly 4 per cent during this period, climbing over 470 points, rising above the 13,000 level last week. Energy stocks are charging higher, and represent 37 per cent of the stocks on the positive breakouts list.

The negative breakouts list (stocks with negative price momentum) remains low at just five companies.

A small cap financial stock staging a comeback after falling to its lowest level since 2013 last month appears on the positive breakout lists and is discussed below – Fiera Capital Corp. (FSZ-T).

A brief outline is provided that may serve as a springboard for further fundamental research.

The Company

Fiera Capital is a small cap financial stock with a market capitalization of approximately $850 million. Fiera is an asset manager with operations across North America serving institutional, high net worth clients, and retail clients.

Last month, the company announced it was purchasing Apex Capital Management, a U.S. based investment firm with $7 billion (U.S.) in assets under administration for $145 million (U.S.) as Fiera continues to expand its U.S. presence. The acquisition is expected to close in April and be immediately accretive, adding between 10 per cent and 15 per cent to earnings per share within the first year. This acquisition will bring the company's assets under administration up to over $111 billion (Cdn).

Dividend Policy

The company pays shareholders a quarterly dividend of 14 cents (Cdn) per share, or 56 cents per year. This equates to an annualized yield of 4.7 per cent.

Management is committed to returning capital to shareholders, frequently hiking its dividend. The company increased the dividend twice in 2015, twice in 2014, and twice in 2013.

Valuation

The stock is valued on an enterprise value-to-EBITDA basis. According to Bloomberg, the stock is trading at a large discount to its historical averages. Valuations vary depending on analysts' assumptions. Analysts' target prices are quite concentrated, ranging from a low of $14 to a high of $15. Individual target prices are as follows: two at $14, $14.50, and two at $15.

Analysts' Recommendations

Fiera Capital has five recent buy recommendations by analysts. There are no hold nor sell recommendations on the stock. The average one-year price target amongst these analysts is $14.50, suggesting that the share price may appreciate over 20 per cent.

The consensus EBITDA estimate is $84 million (Canadian) in 2015, rising over 40 per cent to $119 million in 2016. The consensus earnings per share forecast is $1.00 in 2015, and forecast to rise to $1.17 in 2016.

The company is scheduled to release its fourth-quarter financial results before the markets open on Thursday, March 17.

Chart Watch

The share price has been in a steady downtrend for the past year, making lower highs and lower lows but is now recovering.

Last month, the stock price held at a key support, near $10, and has rallied 20 per cent since February 12, rising above its 50-day moving average and its 200-day moving average.

The stock's next resistance level is around $12, and then between $13.50 and $13.70.

There is downside support at $11.78, where is 200-day moving average lies. Failing that, there is support at $10.76, where the stock's 50-day moving average stands, and then around $10.

The relative strength index is at 74, suggesting the stock is in overbought territory. Generally, a reading of 70 or higher indicates an overbought condition. That being said, a stock can remain overbought for some time.

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 stock 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 stock 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.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

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. Stocks on the positive breakouts list have displayed positive price momentum during this period. Stocks on negative breakouts list have experienced negative price momentum.