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The Steeprock gas-processing plant , one of the assets Versen is buying from Encana Corp. (Veresen Inc./Veresen Inc.)
The Steeprock gas-processing plant , one of the assets Versen is buying from Encana Corp. (Veresen Inc./Veresen Inc.)

Schizas’ Mailbag

Veresen Inc. a case of buy high and sell higher Add to ...

Hi Lou,

Can you update any information on Veresen?


Hey Manuel,

Thanks for the assignment.

This will be the second time that I investigate the possibilities associated with Veresen Inc. On Oct. 15, 2012, Len wanted to know what my thoughts were concerning the stock. It was trading at $13.11, offering a 7.72 per cent dividend yield, but the MACD and RSI were neutral at best. It was advised that buyers take a cautious approach and wait for the stock to break above resistance at $13.50 with conviction. Owners of the stock were instructed to maintain surveillance on their shares to ensure the sanctity of their dividend.

By Dec. 12, 2012, the shares hit a 52-week low of $11.22, providing a very attractive entry point. Once again patience was rewarded. Another look under the hood of this mid-stream energy infrastructure company will inform my thoughts on VSN.

The three-year chart provides a number of interesting patterns worth mentioning. The bounce off the 52-week low started a new advance that has produced a better than 19 per cent capital gain in just under five months go along with the dividend. In addition, the MACD and the RSI generated buy signals at the lows which benefited investors who make use of these indicators. Finally a golden cross has formed which suggests there could be more gas in the tank.

The six-month chart depicts the move through the 50- and 200-day moving averages as well as resistance at $12.50 that occurred in January of 2013. The golden cross surfaced in late February and by late April VSN broke above resistance at $13.00. The next levels of resistance come in at, $13.50, $14.00 and then at $14.50. The MACD and the RSI are both indicating that there may be more to come with this stock. The company will report first-quarter results on May 8, 2013. Make sure to mark that on your calendar.

At this point I would say that with a golden cross on the chart, the momentum indicators indicating that buyers are taking renewed interest and the shares breaking above resistance that there is enough evidence to support a buy.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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