A clear takeaway from today's TSX Crosses report is that yield securities are back in play.
Income-paying securities dominate the 'golden cross' and 'potential golden cross' lists with defensive, yield investments regaining positive price momentum.
In December, we discussed a stock that had recently exhibited a bearish signal called a "death cross" - Clearwater Seafoods Inc. (CLR-T).
A "death cross" occurs when a shorter-term moving average, like the 50-day moving average in this case , crosses below a longer-term moving average, such as the 200-day moving average. When this occurs, it marks a potential negative signal confirming the downtrend in the price action may have traction.
At the time, Clearwater's share price was $11.85, but it has subsequently declined 13 per cent to close at $10.32 on Monday. While the stock pays shareholders a dividend, the third-quarter earnings miss resulted in investors placing the company in the penalty box.
This month, we are shifting the focus to a dividend stock that may soon exhibit a bullish signal called a "golden cross." The stock highlighted in this TSX Crosses report is Boralex Inc. (BLX-T).
A "golden cross" occurs when a short-term moving average, like the 50-day moving average, crosses above a longer-term moving average, such as the 200-day moving average. 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 above the 200-day moving average by a certain percentage, such as 3 per cent, to confirm the bullish signal.
In recent weeks, Boralex's share price broke out of a downtrend that had been in place since mid-2016. The 50-day and 200-day moving averages are both rising with the share price crossing above these two moving averages. The next key resistance level is around $20, and there is strong downside support at $18.
Boralex pays investors a quarterly dividend of 14 cents per share, or 56 cents per share on a yearly basis. This equates to an annualized dividend yield of 2.9 per cent.
From a fundamental perspective, analysts are forecasting a healthy price return of over 20 per cent over the next year. Ten analysts share an unanimous "buy" recommendation on the stock. The consensus one-year target price is $23.48 with analyst target prices ranging from a low of $20.25 to a high of $25. Individual target prices are: $20.25, $22, $23, $23.50, three at $24, two at $24.50, and $25.
The consensus earnings before interest, taxes, depreciation and amortization (EBITDA) estimate is $241-million for 2016 and EBITDA is forecast to rise over 40 per cent to $345-million in 2017.
Listed below are securities with recent golden and death crosses, as well as potential future golden and death crosses.
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.