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ShawCor: A case study in taking profits when available

Hi Lou,

Do you think ShawCor Ltd. still has some upside? I bought 500 shares at $23.84 last October and the stock is currently trading at $31.40. It seems to have stalled.

Should I be taking profits now and see if it pulls back and then buy back in at a lower price? I believe the target is around $37.

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Hey Bruno,

Thanks for the assignment. ShawCor. Ltd. is primarily known for the products and services they provide to the pipeline and pipe services sector, and the petrochemical and industrial segments of the oil and gas industry. You have booked a healthy profit of 31.71 per cent profit in six months which brings up the question of how much is enough. I always say take what the road gives you. If you are going to fast under poor driving conditions you will find yourself in the ditch. If you are going too slowly for the conditions you are creating a hazard for yourself and other drivers.

An examination of the charts will provide some further intelligence as to the trend, support, and resistance that you will find on your highway to wealth.

The three-year chart tells the tale of a great advance that started off the October 2011 lows and ran with conviction through March of 2012. However the uptrend has met resistance at $32.00 and is now beginning to chew into your hard earned profits. If the shares break above $32.00 the next level of resistance is at $34.00. The historical high for the stock is $40.00. These factors tell me that it will take extremely aggressive conditions to reach the top of the mountain.

The six-month chart provides a close-up of the resistance at $32.00 and the testing of support along the 50-day moving average. The RIS and MACD are not providing much in the way of signals to help us get a better sense of direction. I have an old rule of thumb that I always use when it comes to investing. When in doubt – get out! The fact that you are asking if enough is enough says at some level you want to go to cash. So act on your gut. With cash in hand you can make another decision when you are not dealing with that nagging feeling at the back of your mind.

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Make it a profitable day and happy capitalism!

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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

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