Major North American equity markets gave up some ground on Monday, posting relatively minor losses. In the U.S., the Dow Jones Industrial Average, S&P 500 Index, and Nasdaq composite all retreated between 0.1 per cent to 0.4 per cent.
In Canada, the S&P/TSX composite index fell by a larger amount dragged down by the 2.4 per cent drop in the price of oil. The S&P/TSX Composite Index lost 103 points, or 0.7 per cent to close at 14,498. Month to date, the index is up 3.08 per cent, and year to date, the index is up a respectable 11.44 per cent.
On today's Breakouts Report, the list of securities on the positive breakouts list (stocks with positive price momentum) declined to 38 securities. Meanwhile, the list of stocks on the negative breakouts list (stocks with negative price momentum) expanded to 15 securities.
Discussed today is a stock that has been in a stellar uptrend – whose share price has jumped over 60 per cent year-to-date. This is a stock to watch for growth investors with a high-risk tolerance, particularly if there is a pullback in the share price. The security I am referring to is QHR Corporation (QHR-X).
A brief outline is provided below that may serve as a springboard for further fundamental research.
Kelowna, B.C.-based QHR is a technology stock serving the health care industry as an electronic medical record provider. The stock is listed on the TSX Venture Exchange.
More than 80 per cent of the company's revenue is recurring, providing an element of stability as well as predictability to QHR's revenue stream and cash flow. In the first quarter, recurring revenue represented 87.6 per cent of total revenue.
Before the market opened on May 12, QHR reported slightly better-than-expected first-quarter financial results that sent the share price soaring 8 per cent that day. Revenue came in at $7.8-million, up 14.8 per cent year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $1.2-million, up 7.4 per cent compared to the same period last year. The company has a solid balance sheet with over $11-million in cash and no debt as of March 31.
On June 3, management announced TELUS Health, a division of telecom operator Telus Corporation, is partnering with QHR in order to create an efficient, secure, convenient, and informative national communications service to physicians across the country.
The chief medical officer at TELUS Health, Michael Guerriere, stated, "Creating a solution that ensures secure and convenient communications between physicians across the country is an essential building block in our quest to improve Canada's healthcare system and creating better health outcomes for all Canadians."
He went on to say, "Addressing the evolution of Canada's healthcare system – often referred to as the largest social challenge of our generation, requires us to rethink the way we work and collaborate. This industry-led proposed collaboration with QHR to innovate and break down communication barriers through the use of technology will bring us another step closer to the future of healthcare and is an investment in Canada's digital economy."
The company does not pay shareholders a dividend.
The stock's valuation appears expensive relative to historical levels. According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 13.8 times the 2017 consensus estimate, well above its three-year historical average multiple of 9.2 times. Over the past three years, the share price has traded predominantly at a valuation ranging from an 8 times multiple to a 12 times multiple.
According to Bloomberg, there are six analysts whom cover this stock and all six analysts have buy recommendations. The one-year price target is $2.31, which implies a potential price return of 7 per cent over the next 12 months. Individual target prices are as follows: $2.15, two at $2.25, $2.30, $2.40, and $2.50, suggesting potential one-year returns of between 0 per cent and 16 per cent.
The Street is forecasting revenue of $33.1-million in 2016, up from $28.1-million in 2015 and $25-million in 2014, and anticipated to rise nearly 16 per cent to $38.3-million in 2017. The consensus EBITDA estimate is $5.3-million in 2016, increasing to $7.4-million in 2017.
The share price is in an uptrend, rising 64 per cent year to date.
The stock price can be quite volatile with trading volumes fluctuating. For instance, on Monday, only 20,041 shares traded, but last Wednesday 338,503 shares traded. The two-month historical daily average volume is approximately 114,000 shares.
Should the share price pullback, there is initial downside support around $2, and failing that around $1.90, which is near the stock's 50-day moving average (at $1.92). There is additional support between $1.50 and $1.60 with the stock's 200-day moving average at $1.50.
The relative strength index is at 64, suggesting the share are still in neutral territory. Generally, a reading at or above 70 indicates an overbought condition.
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.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
Below is a list of securities principally from the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Securities on the positive breakouts list have displayed positive price momentum during this period. Securities on negative breakouts list have experienced negative price momentum.
|Positive Breakouts||July 25 close|
|ATD.B-T||Alimentation Couche-Tard Inc||$60.04|
|AIF-T||Altus Group Ltd||$23.04|
|ATP-T||Atlantic Power Corp||$3.35|
|BMO-T||Bank of Montreal||$84.94|
|BPF.UN-T||Boston Pizza Royalties Income Fund||$21.03|
|BEP.UN-T||Brookfield Renewable Energy Partners LP||$40.79|
|CGY-T||Calian Group Ltd.||$22.71|
|CNR-T||Canadian National Railway Co||$83.99|
|CPX-T||Capital Power Corp||$20.06|
|CUF.UN-T||Cominar Real Estate Investment Trust||$18.20|
|DIR.UN-T||Dream Industrial REIT||$9.05|
|DRM-T||DREAM Unlimited Corp||$8.49|
|FCR-T||First Capital Realty Inc||$22.67|
|HWD-T||Hardwoods Distribution Inc||$18.00|
|III-T||Imperial Metals Corp||$7.32|
|DR-T||Medical Facilities Corp||$20.97|
|MNW-T||Mitel Networks Corp||$9.53|
|MTL-T||Mullen Group Ltd||$15.93|
|OTC-T||Open Text Corp||$82.42|
|QSR-T||Restaurant Brands International Inc||$59.27|
|RCI.B-T||Rogers Communications Inc||$57.80|
|SJR.B-T||Shaw Communications Inc||$26.20|
|STB-T||Student Transportation Inc||$7.00|
|SPB-T||Superior Plus Corp||$11.44|
|TRI-T||Thomson Reuters Corp||$57.41|
|X-T||TMX Group Ltd||$56.40|
|RNW-T||TransAlta Renewables Inc||$13.98|
|TSL-T||Tree Island Steel Ltd.||$4.75|
|WCN-T||Waste Connections Inc.||$97.88|
|WFT-T||West Fraser Timber Co Ltd||$45.75|
|BAD-T||Badger Daylighting Ltd||$20.57|
|BXE-T||Bellatrix Exploration Ltd||$1.16|
|BLU-T||BELLUS Health Inc.||$0.23|
|BDI-T||Black Diamond Group Ltd||$4.73|
|BNE-T||Bonterra Energy Corp||$23.96|
|CXR-T||Concordia Healthcare Corp||$23.59|
|CPG-T||Crescent Point Energy Corp||$19.06|
|CRN-T||Crown Capital Partners Inc.||$9.00|
|MEQ-T||Mainstreet Equity Corp||$34.67|
|PGF-T||Pengrowth Energy Corp||$1.85|
|RMP-T||RMP Energy Inc||$1.10|
|TOG-T||TORC Oil & Gas Ltd||$7.26|