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Today, Canadian manufacturing sales data from the month of November will be reported.

In the U.S., key announcements include December housing starts data, December building permits figures, weekly initial jobless and continuing claims reports. In addition, weekly oil inventory and natural gas storage reports will be released by the U.S. Energy Information Administration.

Overseas, China's economic calendar is quite active with fourth-quarter gross domestic product (GDP), December industrial production, and December retail sales all being reported.

Briefly recapping Wednesday's performance, in the U.S., the Dow Jones Industrial Average lost 0.11 per cent, the S&P 500 index gained 0.18 per cent, and the Nasdaq composite index advanced 0.31 per cent.

Turning to Canada, the S&P/TSX composite index closed down 44 points, or 0.28 per cent. There were 68 securities in the TSX Index that advanced, 175 securities declined in value, and seven stocks closed the day unchanged.

Month to date, the TSX Index is up 0.72 per cent.

Today's TSX Breakouts report is brief. There are 21 stocks on the positive breakouts list (stocks with positive price momentum) and 10 securities on the negative breakouts list (stocks with negative price momentum).

The security highlighted today may soon appear on the positive breakouts list – Chartwell Retirement Residences (CSH.UN-T). It offers investors a 3.8-per-cent yield combined with 9-per-cent upside expectations. The Trust's past performance is positive. Looking at the Trust's price returns over the past three years, which does not include distributions, the unit price rallied 15.4 per cent in 2016, rose 6.6 per cent in 2015, and gained 19.2 per cent in 2014.

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

The Trust

With over 175 locations, Chartwell is the largest owner and operator of senior residences in Canada. In terms of geographical breakdown, as of Sept. 30, 53 per cent of Chartwell's interest in owned suites were located in Ontario, 34 per cent were located in Quebec, 10 per cent in B.C., and 3 per cent in Alberta.

After the market closed on Nov. 9, the company reported solid third-quarter financial results. Funds from operations (FFO) came in at 24 cents per unit, a penny ahead of the Street's expectations. Adjusted funds from operations (AFFO) came in at 22 cents per unit, in-line with the consensus estimate. Same property net operating income increased over 7 per cent year-over-year. Same property occupancy was relatively stable, improving slightly to 93.6 per cent from 92.7 per cent in the previous year.

On the third-quarter conference call, management indicated that certain markets, notably Ontario and Quebec, may see an uptick in competitive pressures with roughly 2 per cent or 2.5 per cent of new supply expected to enter the market over the next year.

Chartwell is scheduled to report its fourth-quarter financial results on Feb. 23.

Distribution policy

Chartwell pays its unitholders a monthly distribution of 4.6818 cents per unit, or 56.1816 cents on a yearly basis. This equates to an annualized yield of 3.8 per cent.

Looking back, management announced a distribution increase in early 2016 as well as in early 2015. Prior to that, the distribution was held constant from 2009 until early 2015.

The AFFO payout ratio was 64.6 per cent for the first nine months of 2016.


Units of Chartwell are trading at a price-to-FFO multiple of 15.4 times the 2017 consensus estimate.

The average one-year target price is $16.21, suggesting the units can realized a potential price return of over 9 per cent over the next 12 months.

Target prices range from a low of $15 to a high of $17. Individual target prices supplied by seven firms are as follows in numerical order: $15, two at $16, $16.25, $16.50, $16.75, and $17.

Analysts' recommendations

According to Bloomberg, Chartwell is covered by eight analysts. Since November, seven analysts have issued research reports, four analysts have 'buy' recommendations and three analysts have 'hold' recommendations. The eight firms providing research coverage are as follows in alphabetical order: BMO Capital Markets, Canaccord Genuity, CIBC World Markets, EVA Dimensions, GMP, RBC Capital Markets, Scotia Capital, and TD Securities.

Over the past few weeks, two analysts raised their recommendations. Jenny Ma, the analyst from Canaccord Genuity, lifted her recommendation to a 'buy' from a 'hold'. In addition, Jimmy Shan, the analyst from GMP, increased his recommendation to a 'buy' from a 'hold' and raised his target price to $16.75 from $16.

Financial forecasts

The consensus FFO per unit estimate is 91 cents in 2016, and expected to rise over 5 per cent to 96 cents in 2017. An additional five per cent growth is forecast for 2018 with the consensus estimate at $1.01. The Street is forecasting AFFO per unit of 86 cents in 2016, 90 cents in 2017, and 94 cents in 2018.

Analysts have steadily revised their FFO and AFFO forecasts higher over the past year. For instance, one year ago, the consensus FFO per unit estimates were 84 cents for 2016 and 89 cents for 2017. Halfway through the year, on July 1, the consensus FFO per unit forecasts were 90 cents for 2016 and 95 cents for 2017.

Chart watch

Year to date, the unit price is up 1 per cent.

Units of Chartwell have delivered solid returns for unitholders over recent years. Looking back at the Trust's price returns, which does not include distributions, the unit price rallied 15.4 per cent in 2016, rose 6.6 per cent in 2015, gained 19.2 per cent in 2014, declined 8.1 per cent in 2013, and soared 27.9 per cent in 2012.

In early 2016, the unit price rallied from $12 to $16 by the beginning of July. The unit price subsequently experienced a 50 per cent retracement, trading down to $14 and held at this level, a key level of support, before climbing higher again. Also positive, earlier this month, the Chaikin Money Flow oscillator turned positive– a bullish signal.

The unit price has initial overhead resistance around $15, close to its 200-day moving average (at $14.95), and after that around $16. There is initial downside support around $14, and failing that, there is strong support around $13.

The relative strength index reading is at 58, suggesting the units are neither overbought nor oversold.


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.

Positive BreakoutsJan. 18 close
ALC-TAlgoma Central Corp $13.40
BTB.UN-TBTB Real Estate Investment Trust $4.60
CGO-TCogeco Inc $60.30
DRG.UN-TDream Global REIT $9.59
EFX-TEnerflex Ltd $18.49
EXF-TEXFO Inc $6.72
GSY-Tgoeasy Ltd $26.01
HWO-THigh Arctic Energy Services Inc $5.59
IVN-TIvanhoe Mines Ltd $3.61
LNF-TLeon's Furniture Ltd. $18.29
MRU-TMetro Inc $42.22
MST.UN-TMilestone Apartments REIT $19.66
PAA-TPan American Silver Corp $24.29
QBR.B-TQuebecor Inc $38.90
RME-TRocky Mountain Dealerships Inc $10.50
SHOP-TShopify Inc. $66.17
ZZZ-TSleep Country Canada $30.45
TKO-TTaseko Mines Ltd $1.65
TNC-TTIO Networks Corp. $3.16
RNW-TTransAlta Renewables Inc $14.95
VSN-TVeresen Inc $13.31
Negative Breakouts
AAV-TAdvantage Oil & Gas Ltd $8.24
ARX-TARC Resources Ltd $20.83
CR-TCrew Energy Inc $6.18
GTE-TGran Tierra Energy Inc $3.45
LGT.B-TLogistec Corp $34.25
MAL-TMagellan Aerospace Corp $16.82
PXT-TParex Resources Inc $15.01
SJ-TStella-Jones Inc $38.85
SXP-TSupremex Inc $4.80
WEF-TWestern Forest Products Inc $1.80

Source: Bloomberg

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