Skip to main content

The Globe and Mail

Constellation Software looking to continue its massive run

AUDINDesign/Getty Images/iStockphoto

Hi Lou,

What is your analysis of Constellation Software?

Thank you,

Story continues below advertisement


Hey Adam,

Thanks for the assignment.

Constellation Software Inc. is a deal factory player in the software space having acquired 125 small players in niche markets. Once a deal is completed CSU allows the management of the acquired company to continue to operate freely in their unique vertical space avoiding culture clashes that destroy value. The stock has been on a tear since November of 2011 when it bounced off of $60.00 and ran to a 52-week high of $284.72 by April of 2014.

An inspection of the charts will provide insight as to trend, support, and resistance that will form the basis of the analysis.

The three-year chart provides a textbook example of a solid two year advance that has taken a breather. The uptrend line has been breached and the stock is trading below the 50-day moving average. The MACD and the RSI both signalled a shift towards selling in early April as some investors booked well-earned profits ahead of the release of first-quarter results. What needs to be established is if CSU can start another new leg up and continue the advance.

The six-month chart provides a close up of the top in April of 2014 and the sell signals generated by the MACD and the RSI. What is evident is that since May, resistance has formed at $250.00. What we are seeing is a pullback not necessarily a trend reversal. CSU has broken below support along the 50-day moving average but seems to be building a base. The MACD and the RSI are indicating that buyers are still interested in this growth story.

Story continues below advertisement

The next major event on the calendar for the stock will be the release of second-quarter results in July. CSU is a high multiple stock which needs to feed the street in order to keep driving the advance.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to

Report an error Editorial code of conduct
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to