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This stock offers a conservative play on growth in Western Canada

Canadian Utilities is investing in new electricity infrastructure in Alberta, so the company should continue to grow, and more importantly, raise its dividend.

Fred Lum/The Globe and Mail

Hi Lou,

I'm interested in acquiring Canadian Utilities. Could you run a chart to see if now is a good time please?


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Hey Susan,

Thanks for the assignment.

Canadian Utilities Ltd. operates in a number of different but associated sectors including pipelines, energy transmission, power generation, plus structures and logistics. The dividend yield is 2.79 per cent and over the last thirty days its average daily volume has been 423,693 shares. The market capitalization for the company is $9.932-billion. The stock offers reduced risk given its size, dividend, and the healthy trading volume.

An audit of the charts will help determine if this is indeed a good time to buy.

The three-year chart represents a stock that had a great run off the 2009 lows near $17.25 but has breached its uptrend and has been trading in a range since May of 2013. There is support at $34.00 and resistance at $38.00. The MACD and the RSI both generated a buy signal in December of 2013 when the shares were trading near $35.00.

The six-month chart depicts the trading opportunities presented by CU. The MACD and the RSI signalled a buy in September, a sell in November, and the previously mentioned buy in December. The momentum indicators are still pointing to a continuation of the advance.

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Based on the evidence at hand it seems that you could approach CU with the intention to trade it for profit. Over the last six months the stock has offered interesting entry and exit points that have generated healthy returns. The 2.26 per cent move up on Feb. 6, 2014 came on the heels of an increase in the dividend. The next flex point will come on Feb. 21 when the company releases its next quarterly results.

CU is well positioned to benefit from the continued growth in the western Canadian resource economy. If you don't feel comfortable trading for profit you could take a long term view and start accumulating this stock.

Make it a profitable day and happy capitalism!

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