Today, in terms of earnings releases for Canadian stocks, these companies are all scheduled to release their quarterly results: Allied Properties REIT (AP.un-T), Crombie REIT (CRR.un-T), Dream Global REIT (DRG.un-T), Exchange Income Corp. (EIF-T), First Majestic Silver Corp. (FR-T), Hudbay Minerals Inc. (HBM-T), IAMGOLD Corp. (IMG-T), Lundin Mining Corp. (LUN-T), Maple Leaf Foods Inc. (MFI-T), and Pason Systems Inc. (PSI-T).
In terms of economic reports, Canadian retail sales figures for December will be released. In the U.S., weekly mortgage applications data, January existing home sales figures, along with January existing home sales data, and the Fed's minutes from the last meeting will all be released. Weekly oil inventory data, typically released on Wednesday, will be reported on Thursday due to the holiday on Monday.
This morning, commodity prices are stable to slightly lower. The price of oil is hovering around the $54 (U.S.) level, the price of natural gas futures continue to slide lower and is down approximately 1 per cent. Finally, the price of gold is relatively unchanged.
Briefly recapping Tuesday's stock market returns, major North American stock markets all finished the day in positive territory.
In the U.S., the Dow Jones Industrial Average increased 0.58 per cent, the S&P 500 index advanced 0.60 per cent, and the Nasdaq composite index gained 0.47 per cent.
Turning to Canada, the S&P/TSX composite index rallied 84 points, or 0.53 per cent with all 11 sectors closing higher. There were 155 securities in the TSX Index that advanced, 93 securities declined in value, and one stock closed the day unchanged.
The TSX Index is up 4.15 per cent year to date.
On today's TSX Breakouts report, there are 57 stocks on the positive breakouts list (stocks with positive price momentum), and 10 stocks are on the negative breakouts list (stocks with negative price momentum).
Discussed today is a company that was the top performing stock in the S&P/TSX composite energy sector index in 2016, and the third best performing stock in the S&P/TSX composite index last year. Despite is phenomenal rally in 2016, analysts remain bullish and expect the positive price momentum to continue for the stock. The company highlighted today Enerplus Corp. (ERF-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Calgary-based Enerplus is an oil and gas producer with operations located in western Canada as well as in the United States (Pennsylvania, North Dakota Bakken, and Montana). In 2015, approximately 54 per cent of its production was natural gas with the balance, 44 per cent, of its production from oil and NGL's. In terms of geographical production breakdown, in 2015, approximately 62 per cent of its production was from the U.S. with the remainder from Canada.
On Jan. 31, the company announced its 2017 capital budget of $450-million. Of the $450-million, approximately $330-million will be allocated to the Bakken, approximately $60-million to the Marcellus, and $60-million to the Canadian waterfloods. Annual production is anticipated to average between 86,000 and 90,000 barrels of oil equivalent per day.
The Jan. 31 news release also provided a three-year production outlook, stating, "With Enerplus' strong capital efficiencies, reduced cost structure, and significant financial flexibility, the Company is well positioned to deliver profitable growth in the current commodity price environment. Enerplus has a deep inventory of high quality drilling locations in North Dakota which is expected to drive strong crude oil production growth as the Company executes its development plan. Enerplus is targeting annual liquids production growth of approximately 20% per year through 2019. Over the same period, total company annual production growth is targeted at approximately 10% per year. This production growth is expected to be funded by internally generated cash flow based on commodity prices of US$55 per barrel WTI and US$3.00 per Mcf NYMEX."
The company is dual listed, trading on both the Toronto Stock Exchange and the New York Stock Exchange under the same ticker.
The company will be releasing its fourth-quarter financial results before the market opens on Feb. 24.
Dividend policy
The company pays its shareholders a monthly dividend of one cent per share, or 12 cents per share on a yearly basis. This equates to an annualized dividend yield of 0.95 per cent.
Management has cut its dividend numerous times over the years. The most recent dividend decrease was announced in February 2016, the monthly dividend was reduced to a penny per share from three cents per share.
Financial forecasts
The Street is forecasting cash flow per share of $1.32 in 2016, rising to $1.92 in 2017, and reaching $2.44 in 2018.
Over the past six months, forecasts have been relatively stable with minor negative revisions. In August 2016, the consensus cash flow per share estimates were $1.37 for 2016 and $1.95 for 2017.
Valuation
The stock is commonly valued by analysts on an enterprise value-to-debt adjusted cash flow basis.
The consensus one-year target price is $15.20, suggesting a potential price return of 21 per cent over the next 12 months. Target prices range from a low of $13.50 (at AltaCorp Capital) to a high of $16.50 (at Macquarie, Desjardins Securities, and Veritas Investment Research). Individual target prices provided by 15 firms are as follows in numerical order: $13.50, three at $14, $14.50, two at $15, three at $15.50, two at $16, and three at $16.50. This implies upside potential of between 7 per cent and 31 per cent over the next year.
Analysts' recommendations
In 2017, 16 analysts have issues research reports, 13 analysts have "buy" recommendations, two analysts have "hold" recommendations, and one analyst has the stock currently "under review."
The 16 firms providing recent research coverage are as follows in alphabetical order: AltaCorp Capital, Barclays, BMO Capital Markets, Canaccord Genuity, CIBC World Markets, Credit Suisse, Desjardins Securities, GMP, Macquarie, National Bank Financial, Peters & Co. Ltd., Raymond James, RBC Capital Markets, Scotia Capital, TD Securities and Veritas Investment Research.
Insider transaction activity
The most recent insider transaction activity occurred on Jan. 19. Ed McLaughlin, the president of U.S. operations, purchased 3,500 shares at a price of $9.20 (U.S.) per share.
Chart watch
There is only one sector in the S&P/TSX composite index that has a loss year-to-date – the energy sector. The share price of Enerplus is down 1.3 per cent year-to-date, marginally outperforming the energy sector, which is down 3.3 per cent, and the stock is outperforming many of its peers.
The stock remains in an uptrend, making higher highs and higher lows. In 2016, the share price jumped 168 per cent, rising to $12.74 from $4.75.
In terms of key resistance and support levels, there is minor overhead resistance around $13, and after that, there is major resistance around $15. There is downside support around $10, just above its 200-day moving average, which lies at $9.57.
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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.