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Tuesday’s TSX breakouts: A top-performing stock with 14 ‘buy’ calls and 39% upside forecast

On Monday in the U.S., the Dow Jones Industrial Average declined 0.22 per cent, the S&P 500 index slipped 0.10 per cent, and the Nasdaq composite index increased 0.20 per cent.

In Canada, the S&P/TSX composite index added 64 points, or 0.41 per cent. There were 173 securities in the TSX Index that advanced, 70 securities declined in value, and eight stocks closed the day unchanged. The majority of the sectors, nine of the 11, closed in positive territory led by strength in the health care sector given the 11 per cent jump in the share price of marijuana producer, Canopy Growth Corp. (WEED-T).

The TSX Index is up 1.43 per cent year-to-date.

On today's TSX Breakouts report, there are 35 stocks on the positive breakouts list (stocks with positive price momentum), and 13 stocks are on the negative breakouts list (stocks with negative price momentum).

Featured today is a stock that is on the cusp of appearing on the positive breakouts list. The security I am referred to is Integra Gold Corp. (ICG-X).

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

The company

Integra is an advanced-stage gold exploration company with its high-grade Lamaque project located in the prolific Val-d'Or gold district in Quebec, just 550 kilometers northwest of Montreal.

On Feb. 27, the company released an updated preliminary economic assessment. Average annual gold production for the first full eight years (year three though to year 10) was forecast to be 135,000 ounces. Peak production, in year seven, was anticipated to reach 155,000 ounces. Total production was pegged at 1.3 million ounces with a mine life of 10 years. Cash costs were forecast to be $458 (U.S.) per ounce, with all-in sustaining costs of $634 (U.S.) per ounce. A potential catalyst for the company is exploration success. In the news release, management stated, "An underground exploration ramp to support a bulk-sampling program in Q3 (third-quarter) 2017 is currently underway at Lamaque."

Dividend policy

The company is focused on exploration and does not pay its shareholders a dividend.

Analysts' recommendations

Despite being a small cap stock, with a market capitalization of $416-million, there are 14 analysts that cover the company, and even more impressive is that all 14 analysts have 'buy' recommendations. More specifically, 12 analysts have "buy" recommendations and two analysts have "speculative buy" recommendations.

The 14 firms providing research coverage are as follows in alphabetical order: Beacon Securities, BMO Capital Markets, Cormark Securities, GMP, Haywood Securities, Industrial Alliance Securities, Laurentian Bank Securities, M Partners, Mackie Research Capital, Macquarie, Paradigm Capital, Raymond James, RBC Capital Markets, and Roth Capital Partners.

Revised recommendations

Several analysts have recently made revisions to their target prices. In March, Tara Hassan, the analyst from Raymond James revised her target price to $1.35 from $1.25, and Tyron Breytenbach, the analyst from Cormark Securities, increased his target price to $1.40 from $1.20. Last month, Michael Gray, the analyst from Macquarie, raised his target price to $1.10 from $1, while Ingrid Rico, the analyst from GMP, trimmed her target price to $1.15 from $1.25.

Financial forecasts

The Street is forecasting solid future growth for the company. The consensus revenue estimates are $62-million (Cdn) for 2018 and $141-million in 2018. The company is anticipated to turn cash flow positive in 2018. The cash flow per share estimates are 4 cents in 2018 (Cdn) and 12 cents in 2019.

Valuation

Many analyst value the stock on a price-to-net asset value (P/NAV) basis. Individual target prices range from a low of 90 cents (at Haywood Securities) to a high of $1.75 (at M Partners). The average one-year target price is $1.21, implying there is 39 per cent upside potential in the share price over the next 12 months. Individual target prices are as follows in numerical order: 90 cents, three at $1, $1.05, $1.10, $1.15, two at $1.25, two at $1.30, $1.35, $1.40, and $1.75.

Insider transaction activities

So far in 2017, there has not been any insider transaction activity reported.

Chart watch

Year to date, the share price is up 55 per cent. If this small cap gold stock was included in the S&P/TSX composite index, it would be the top performing gold stock.

Despite being a small cap stock, there is amble liquidity. The three-month historical daily average trading volume is approximately 1.5-million shares.

This month, the stock experienced a bullish 'golden cross' pattern, with its 50-day moving average (at $0.77) crossing above its 200-day moving average (at $0.74). A "Golden Cross" occurs when a short-term moving average, in this case the 50-day moving average, crosses above a longer-term moving average, in this case the 200-day moving average. When this occurs, it marks a potentially positive signal suggesting the upward price momentum may have traction.

Looking at key resistance and support levels, the stock price has initial overhead resistance around 95 cents, and after that around $1. There is initial downside support around 80 cents. Failing that, there is support around 70 cents.

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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.

TSX breakouts

Positive BreakoutsMarch 27 close
AQN-TAlgonquin Power & Utilities Corp $12.88
ACO.X-TAtco Ltd $52.08
BCE-TBCE Inc $59.00
BLX-TBoralex Inc $21.47
BTB.UN-TBTB Real Estate Investment Trust $4.77
CAR.UN-TCanadian Apartment Properties REIT $33.31
CFX-TCanfor Pulp Products Inc $12.13
CWX-TCanWel Building Materials Group Ltd. $6.48
CPX-TCapital Power Corp $26.14
CG-TCenterra Gold Inc $7.59
DDC-TDominion Diamond Corp $17.30
EMP.A-TEmpire Co Ltd $19.62
FTS-TFortis Inc $44.07
WN-TGeorge Weston Ltd $116.28
GIL-TGildan Activewear Inc $35.24
JE-TJust Energy Group Inc $8.28
L-TLoblaw Cos Ltd $72.91
LGT.B-TLogistec Corp $35.72
MEQ-TMainstreet Equity Corp $36.77
MFI-TMaple Leaf Foods Inc $32.29
MRD-TMelcor Developments Ltd $16.29
MRT.UN-TMorguard Real Estate Investment Trust $15.93
MSI-TMorneau Shepell Inc $19.90
NFI-TNew Flyer Industries Inc $47.76
NWH.UN-TNorthWest Healthcare Properties REIT $11.05
PKI-TParkland Fuel Corp $29.26
PBL-TPollard Banknote Ltd. $9.95
PBH-TPremium Brands Holdings Corp $82.41
RCI/B-TRogers Communications Inc $57.96
SHOP-TShopify Inc. $94.46
STB-TStudent Transportation Inc $7.78
SMU.UN-TSummit Industrial Income REIT $6.53
TCL.A-TTranscontinental Inc $24.75
UNS-TUni-Select Inc $34.60
VNR-TValener Inc $21.67
Negative Breakouts
AXY-TAlterra Power Corp. $4.60
UFS-TDomtar Corp. $49.63
FCR-TFirst Capital Realty Inc $19.61
HRX-THeroux-Devtek Inc $11.52
KBL-TK-Bro Linen Inc $39.65
KDX-TKlondex Mines Ltd $5.52
LNF-TLeon's Furniture Ltd. $16.37
MTL-TMullen Group Ltd $16.24
BCI-TNew Look Vision Group Inc $26.62
PD-TPrecision Drilling Corp $5.91
S-TSherritt International Corp $0.89
X-TTMX Group Ltd $66.15
TCW-TTrican Well Service Ltd $3.58

Source: Bloomberg

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