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On today's TSX Breakouts report, there are 15 stocks on the positive breakouts list (stocks with positive price momentum), and 11 securities are on the negative breakouts list (stocks with negative price momentum).

As always, I try to feature a wide range of companies in order to appeal to a variety of investors.

Discussed today is a technology company that may soon appear on the positive breakouts list. Currently, its market capitalization is just below the $200-million screening threshold (at $187-million) and the stock is not in the S&P/TSX Small Cap Index, otherwise, it would appear on the positive breakouts list. The security highlighted today is Blackline Safety Corp. (BLN-X).

The company's share price was resilient during the recent market sell-off. Its stock price has rallied nearly 17 per cent year-to-date with an additional 40-per-cent upside forecast.

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

The company

Calgary-based Blackline Safety manufacturers safety monitoring products providing live-monitoring and wireless gas detection devices. The company products are used in various industries including the energy sector, utilities, industrials, and the engineering and construction market segments.

On Feb. 8, the company reported its fourth-quarter financial results (the company's fiscal year end is Oct. 31). Revenue came in at $4.3-million, up from $2.1-million reported during the same period last year. Gross margin expanded to 44 per cent from 40 per cent last year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at a loss of $621-thousand and an earnings per share loss of 8 cents was reported.

During the fourth quarter, the company completed the final safety certification for its gas G7 devices, the G7 product line is anticipated to accelerate the company's revenue growth. In the earnings release, Chief Executive Officer and Chair Cody Slater stated, "Significant growth throughout the year was met with a dramatic increase in fourth quarter revenue, driven by deployment of the G7 product to over 100 customers." The company has ramped up its sales teams in Canada, the U.S., and the U.K. to support its growth objectives. The company received a $2.3-million order over a five-year period from a North American utility company.

Dividend policy

Management is focused on growing the company, which has yet to become earnings positive. As a result, the company does not pay its shareholders a dividend.

Analysts' recommendations

There are three analysts that cover this micro-cap stock, of which all three analysts have buy recommendations. More specifically, the analyst at Beacon Securities has a "speculative buy" recommendation.

Firms providing research coverage on the company are as follows in alphabetical order: Beacon Securities, PI Financial, and Raymond James.

Revised recommendations

Earlier this month, Ben Cherniavsky, the analyst at Raymond James, upgraded the stock to an "outperform" from a "market perform", and lifted his target price to $6 from $4.50.

Financial forecasts

The Street is forecasting strong growth for the company. The consensus revenue estimate is $20.4-million in fiscal 2018, up from $11.6-million reported in fiscal 2017, and forecast to rise to $34-million in fiscal 2019. The company is anticipated to reported positive earnings per share in fiscal 2019.

Over the past several months, forecasts have increased. To illustrate, three months ago, the Street was anticipating revenue of $16.10-million for fiscal 2018 and $26.1-million for fiscal 2019.

Valuation

Analysts commonly value the stock using a DCF (discounted cash flow) valuation method.

The consensus one-year target price is $7.33, implying the stock price may appreciate nearly 40 per cent over the next 12 months. Individual target prices in numerical order are as follows: $6, $7.75, and $8.25.

Insider transaction activity

There has been mixed trading with both buying and selling activity reported by insiders.

On Feb. 13, Director Dr. John Finbow purchased 1,000 shares at an average price per share of $5 for an account in which he has control or direction over.

Between Jan. 4 and Jan. 25, Clark Swanson, Director of Business Development – Americas, sold a total of 115,400 shares. At the end of January, his portfolio held 379,318 shares.

On Jan. 5, the company's Chief Operating Officer Kevin Meyers exercised his options, receiving 10,000 shares. On Jan. 8, he sold 10,000 shares at an average price per share of $4.50. At the end of January, the account held 74,364 shares.

Chart watch

The technology sector has been an area of strength in the S&P/TSX Composite Index and is the only sector with a positive price return so far this year. Year-to-date, the share price for this technology stock is up nearly 17 per cent.

The share price was resilient during the recent market sell-off and the uptrend remains intact.

On a pullback, there is technical support around $5, and then around $4.50, near its 50-day moving average at $4.49. Failing that, there is support around the $4.25 level, close to its 200-day moving average (at $4.22).

Liquidity can be low for this stock. The three-month daily average trading volume is just below 50,000 shares.

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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, financial forecasts, 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 BreakoutsFeb. 16 close
ADW.A-TAndrew Peller Ltd $16.42
BBD.B-TBombardier Inc $3.75
CAS-TCascades Inc $16.12
GIB.A-TCGI Group Inc $73.92
FSV-TFirstService Corp $90.01
KML-TKinder Morgan $19.97
MNW-TMitel Networks Corp $11.42
MSI-TMorneau Shepell Inc $23.78
RBA-TRitchie Bros Auctioneers Inc $40.64
RUS-TRussel Metals Inc $31.67
SHOP-TShopify Inc. $172.60
TOY-TSpin Master Corp. $54.30
STB-TStudent Transportation Inc $7.95
SPB-TSuperior Plus Corp $12.30
TSGI-TThe Stars Group Inc. $33.55
Negative Breakouts
BIR-TBirchcliff Energy Ltd $3.07
CHP.UN-TChoice Properties REIT $11.90
CHR-TChorus Aviation Inc $8.89
CLR-TClearwater Seafoods Inc $5.90
CR-TCrew Energy Inc $1.69
EFN-TElement Fleet Management Corp. $4.60
IAG-TIndustrial Alliance Insurance & Financial Services Inc. $57.40
MAXR-TMaxar Technologies Ltd. $72.16
PEO-TPeople Corporation $7.00
REAL-TReal Matters $8.28
SJR.B-TShaw Communications Inc $25.14

Source: Bloomberg