From a technical perspective, the stock chart for WSP Global Inc. (WSP-T) is encouraging. Several weeks ago, the share price experienced a bullish technical signal called a "golden cross".
A "golden cross" occurs when a short-term moving average, like the 50-day moving average, crosses above a longer-term moving average, the 200-day moving average in this case. When this occurs, it marks a potentially positive signal, suggesting the upward price momentum may have traction.
Many traders suggest waiting until the 50-day moving average crosses over the 200-day moving average by a certain percentage, such as 3 per cent, to confirm the bullish signal.
Furthermore, the shares appear to have formed an ascending triangle. This occurs when there is a strong overhead resistance level, or ceiling. In the case of WSP, the share price has initial resistance just below $44. In addition, the stock price has been making higher lows. In other words, the lower boundary line, or support level, is rising.
The stock faces initial overhead resistance in the $44 to $45 range, and after there is resistance between $49 and $50.
Should the share price reverse course and drift lower, there is initial downside support around $40, which is close to its 200-day moving average, and failing that, there is strong support around $36.
From a fundamental perspective, the Street is forecasting reasonable upside potential, approximately 10 per cent upside for this share price based on the average one-year target price of $46.35. One-year target prices range from a low of $41.50 to a high of $50.
According to Bloomberg, there are nine 'buy' recommendations, three 'hold' recommendations, and one 'sell' recommendation.
The Street is forecasting earnings before interest, taxes, depreciation and amortization (EBITDA) of $505-million in 2016, increasing to $550-million in 2017. The consensus earnings per share estimate is $2.42 in 2016, and forecast to rise 12 per cent to $2.71 in 2017.
On a valuation basis, according to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 9.1 times the 2017 consensus estimate, which is below its peak of 10 times over the past three year, but slightly above its historical three-year average multiple of 8.8 times.
The company pays its shareholders an attractive quarterly dividend of 37.5 cents per share, equating to an annualized dividend yield of approximately 3.6 per cent.
Below is a list identifying securities with recent, as well as potential future, golden crosses and death crosses. The death cross is a potentially bearish signal for a stock that occurs when the shorter-term moving average crosses below the longer-term moving average.
This report is based on technical analysis. Technical analysis does not replace fundamental analysis, but can help identify companies worth having a closer look at and performing fundamental due diligence research on.
|Golden Crosses||50-day moving avg.||200-day moving avg.|
|BAD-T||Badger Daylighting Ltd.||$24.18||$23.48|
|CSU-T||Constellation Software Inc.||$540.55||$528.51|
|DHX.B-T||DHX Media Ltd.||$7.45||$7.33|
|DIV-T||Diversified Royalty Corp.||$2.31||$2.26|
|HBC-T||Hudson's Bay Co.||$17.08||$16.79|
|MNW-T||Mitel Networks Corp||$9.73||$9.47|
|WSP-T||WSP Global Inc.||$41.77||$40.57|
|Potential Future Golden Cross|
|ADN-T||Acadian Timber Corp.||$18.17||$18.28|
|AGT-T||AGT Food & Ingredients Inc.||$35.43||$36.02|
|ATA-T||ATS Automation Tooling Systems Inc.||$10.26||$10.49|
|MG-T||Magna International Inc.||$51.51||$51.87|
|SUM-T||Solium Capital Inc.||$6.75||$6.75|
|BDT-T||Bird Construction Inc.||$11.91||$12.29|
|MEQ-T||Mainstreet Equity Corp.||$32.64||$33.14|
|Potential Future Death Crosses|