The S&P/TSX Composite jumped 1.1 per cent for the week ending with Thursday's close, leaving fewer technically oversold opportunities by Relative Strength Index (RSI). The benchmark has an RSI reading of 48, approximately half way between the buy signal of 30 and the sell signal of 70.
There are nine oversold index constituents this week, led by Aimia Inc., which is really oversold after the stock took a severe 62 per cent one-week bludgeoning. Westshore Terminals Investment Corp., Uni-Select Inc., Alaris Royalty Corp., Shawcor Ltd. and Stantec Inc. are also oversold.
I picked Power Corp. as the focus stock this week, despite the fact that it's not quite officially oversold with an RSI of 30.4.
Power Corp. stock has traded in a narrow range between $27 and $33 dollars during the past two years. The effectiveness of RSI buy signals has been mixed for the period. The trend seems to be that buy signals predict small rallies, the stock price re-tests the bottom, and only then rallies sustainably. This sequence is particularly evident in January and February 2016 and also in June and September of the same year.
The low volatility of the stock – when it falls it rarely falls far, limiting investor risk – makes Power Corp. tempting at this point. In non-technical terms, the 4.4-per-cent dividend yield is also attractive.
As always, fundamental research should always be completed before any market transactions.
There are 18 overbought, technically vulnerable index members this week, led by New Flyer Industries Inc., Sleep Country Canada, Air Canada, Brookfield Renewable Partners LP and Amaya Inc. are also overbought with heightened risk of a temporary correction.
Follow Scott Barlow on Twitter @SBarlow_ROB.
| | RSI | Price | 200DMA | Return 1W % | Return YTD % | PE Ratio TTM | PE Ratio Fwd |
AIM-T | AIMIA INC | 6.183174 | 3.33 | 8.48155 | -62.28765 | -61.62178 | #N/A N/A | #N/A N/A |
WTE-T | WESTSHORE TERMINALS INVESTME | 23.80827 | 21.2 | 24.9795 | -8.026024 | -17.61041 | 15.31560679 | 13.30822348 |
UNS-T | UNI-SELECT INC | 24.40044 | 31.4 | 31.7802 | -1.997507 | 6.735358 | 16.56127545 | 15.83031503 |
AD-T | ALARIS ROYALTY CORP | 24.85051 | 20.07 | 22.33365 | -3.137064 | -14.14186 | 12.0435438 | 11.70262391 |
SCL-T | SHAWCOR LTD | 26.59972 | 32.56 | 34.26705 | -4.403993 | -8.790796 | #N/A N/A | 16.97601668 |
STN-T | STANTEC INC | 26.72742 | 31.88 | 33.26955 | -7.082489 | -5.678101 | 70.85908679 | 15.84493042 |
ATA-T | ATS AUTOMATION TOOLING SYS | 27.84432 | 12.05 | 11.8134 | -2.665589 | -3.753996 | 30.13660307 | 17.64275256 |
SPB-T | SUPERIOR PLUS CORP | 28.652 | 12.3 | 12.2766 | -1.204816 | -1.714162 | 13.70734724 | 15.56962025 |
TECK.B-T | TECK RESOURCES LTD-CLS B | 29.30865 | 24.8 | 27.46395 | -0.6012085 | -7.703764 | 8.523393877 | 5.699839117 |
H-T | HYDRO ONE LTD | 30.33799 | 23.08 | 24.31335 | -3.913408 | -1.230627 | 20.42477869 | 18.64297254 |
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| | RSI | Price | 200DMA | Return 1W % | Return YTD % | PE Ratio TTM | PE Ratio Fwd |
NFI-T | NEW FLYER INDUSTRIES INC | 87.02315 | 55.4 | 43.08585 | 7.011785 | 36.31057 | 17.90039799 | 16.86391919 |
ZZZ-T | SLEEP COUNTRY CANADA HOLDING | 83.25173 | 39.25 | 30.8295 | 11.50568 | 37.06133 | 28.30089366 | 24.36374922 |
AC-T | AIR CANADA | 81.93063 | 16.46 | 12.45495 | 28.69429 | 20.40965 | 5.274007818 | 5.709330558 |
BEP.UN-T | BROOKFIELD RENEWABLE PARTNER | 79.7812 | 43.13 | 39.6517 | 2.960138 | 9.908931 | #N/A N/A | 129.6586453 |
AYA-T | AMAYA INC | 78.2145 | 25.67 | 20.193 | 7.136899 | 35.03419 | 19.01270094 | 8.917571199 |
BBU.UN-T | BROOKFIELD BUSINESS PT.UNNIT | 78.05409 | 37.44 | 32.34647 | 3.482582 | 16.34026 | #N/A N/A | 22.05679719 |
VRX-T | VALEANT PHARMACEUTICALS INTE | 77.36824 | 18.85 | 23.4653 | 38.90937 | -3.184381 | #N/A N/A | 3.514594443 |
VSN-T | VERESEN INC | 77.00655 | 18.5 | 13.445 | 0.4888656 | 44.44014 | 72.37305375 | 35.44061303 |
MRE-T | MARTINREA INTERNATIONAL INC | 76.75214 | 11.5 | 8.68955 | 6.08856 | 34.28228 | 7.316755051 | 6.153023007 |
DRG.UN-T | DREAM GLOBAL REAL ESTATE INV | 74.85983 | 10.35 | 9.37115 | 3.707423 | 12.54872 | 16.46157357 | #N/A N/A |
LNR-T | LINAMAR CORP | 74.78251 | 63.83 | 56.21685 | 8.204781 | 10.86019 | 7.461059923 | 7.786995242 |
WPK-T | WINPAK LTD | 73.78659 | 58.69 | 47.8349 | 0.4965704 | 29.28935 | 26.14449483 | 24.15604008 |
DHX.B-T | DHX MEDIA LTD | 72.6856 | 6.4 | 6.6124 | 16.36364 | -8.911855 | 54.35105768 | 18.18181818 |
MG-T | MAGNA INTERNATIONAL INC | 72.08518 | 61.17 | 55.752 | 5.374675 | 5.598536 | 8.047419516 | 7.607340114 |
BB-T | BLACKBERRY LTD | 71.68452 | 12.84 | 10.1013 | 0.9433953 | 38.96104 | #N/A N/A | 670.0342107 |
MRU-T | METRO INC | 70.80757 | 46.1 | 42.0858 | -0.3458709 | 15.25869 | 18.89091805 | 16.67872648 |
QSR-T | RESTAURANT BRANDS INTERN | 70.73932 | 81.18 | 65.90055 | 3.984113 | 27.76735 | 37.86367259 | 29.75569122 |
DOL-T | DOLLARAMA INC | 70.36186 | 122.33 | 102.6451 | 1.04907 | 24.58572 | 32.90280636 | 28.52845149 |
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Source: Bloomberg/Scott Barlow