Skip to main content

The Globe and Mail

Chase Canadian Oil Sands' yield with caution

Hi Lou,

What are your thoughts on COS? The dividend is attractive at almost 7 per cent yield. Do you see this as a good time to move into COS?


Story continues below advertisement


Hey Ian,

This will be the third time that I have examined the case for Canadian Oil Sands Ltd. . The first time I ran the charts was on a request from Irene on June 16, 2010. The shares were trading for $28.72 and it was advised to watch support at $26.00 because if that level was breached they would test support at $22.50. Retrospectively that is what transpired.

The second time I analyzed COS was on March 16, 2012 when the shares were trading at $21.63. At the time Mark wanted to know if he should add to his position. It was observed that the stock was trending to a retest of $19.00 and strategy was to buy on a pullback.

Another review of the situation will help you decide if now is a good entry point. Clearly a 7 per cent dividend yield is hard to ignore.

The three-year chart for crude oil needs to be consulted when it comes to the shares of COS. As crude oil goes, so goes the stock. Oil prices are in a freefall and until they turn the pressure on, COS will continue.

The three-year chart for COS indicates that the shares have been in a sell off since April of 2011 and that every attempt to move higher has met with resistance along the 200- and 50-day moving averages.

Story continues below advertisement

Currently the shares are holding support at $20.00 but as mentioned in the March 16, 2012 post it looks like the best case scenario will be a retest of support at $19.00. If $19.00 doesn't hold then there is a thin ledge of support that comes in at $16.00 and below that nothing until $10.00.

The six-month chart illustrates the resistance at $23.00 that the stock met in the beginning of May and the downtrend that dominates the agenda.

The RSI and MACD are both indicating that a reversal of the downtrend has yet to emerge.

At this point we still need to show caution in the face of the downtrend. There is no sense to chase a 7 per cent yield and sacrifice capital in the bargain. If you must chase the yield the best strategy would be to chip away at the stock and accumulate starting at $19.00 and see if it holds.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to

Story continues below advertisement

Visit his website

Report an error
About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.