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analysis

On today’s Breakouts report, there are six stocks on the positive breakouts list (stocks with positive price momentum), most of which are gold stocks, and 127 stocks are on the negative breakouts list (stocks with negative price momentum).

Discussed today is a gold stock that may appear on the positive breakouts list in the near future, particularly if risk aversion persists –Endeavour Mining PLC (EDV-T). The share price has rallied 16 per cent over the past 10 trading sessions. Given the rapid move in the share price, the positive price momentum may pause or retreat in the near-term in order to digest these gains.

A brief outline on Endeavour is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.

The company

With its corporate head office located in London, England, Endeavour Mining is a gold producer with operations in West Africa.

Currently, four mines are in production with a fifth gold mine expected to start-up next year. Production from a new project, Lafigué, is anticipated to begin in the third-quarter of 2024. According to a 2022 Definitive Feasibility Study, average annual production at Lafigué is expected to be 203,000 ounces with an all-in sustaining cost (AISC) of US$871 per ounce and an anticipated mine life of 12.8 years.

Quarterly earnings and outlook

On Aug. 2, the company reported second-quarter financial results. Production from continuing operations came in at 268,000 ounces at an AISC of US$1,000 an ounce. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was US$253,000 Cash flow per share before changes in working capital came in at 71 US cents. During the quarter, 0.4 million shares were repurchased.

For 2023, management anticipates production will come in at between 1.06 and 1.135 million ounces at an AISC of between US$895 and US$950 an ounce. For 2025, production is expected to exceed 1.3 million ounces driven by the new Lafigué mine in Cote D’Ivoire and the expansion at the Sabodala-Massawa mine.

On the earnings call, president and chief executive officer Sebastien de Montessus remarked on anticipated production growth expected next year from two mines, “On the operational front, we are on track to meet our full year guidance for the 11th consecutive year. In line with our strategy of actively managing our portfolio to focus on higher-quality assets, we were pleased to close the sale of our non-core Boungou and Wahgnion mines during the period. The quality of our portfolio is set to further increase as our two growth projects the Sabodala-Massawa BIOX project in Senegal and the Lafigué project in Cote d’Ivoire are progressing well. Both are on budget, are on schedule to commence production in Q2 and Q3 ‘24, respectively. Alongside this year’s investment in our organic pipeline, we are pleased to continue to deliver attractive shareholder returns and have declared our H1 ‘23 dividend for $100 million. On an annual basis, this represents $25 million more than the minimum dividend commitment for the year. Given that the Sabodala-Massawa expansion and the Lafigué greenfield build are expected to both increase the group production and lower our cost base, they will further enhance our capability to reward our stakeholders. As such, our goal is to increase our shareholder returns program once our organic growth projects are completed, thereby ensuring that our efforts to unlock growth immediately benefit all our stakeholders.”

Looking ahead, on Nov. 9, third-quarter financial results will be released before the market opens followed by an earnings call with management. Before year-end, management is also expected to provide a resource update.

Dividend policy

The company pays its shareholders a semi-annual dividend of 40 US cents per share, or 80 US cents per share on a yearly basis. This equates to a current annualized yield of approximately 3.7 per cent.

Analysts’ recommendations

According to Bloomberg, 14 firms issued research reports after Endeavour released its second-quarter financial results, of which 12 were buy-equivalent recommendations, one was a “hold” recommendation (from ISS-EVA), and there was one “sell” recommendation (from Liberum’s Yuem Low).

The firms providing research coverage on the company are: Barclays, Berenberg, BMO Nesbitt Burns, Canaccord Genuity, CIBC World Markets, ISS-EVA, Liberum, Morgan Stanley, National Bank Financial, PI Financial, Raymond James, RBC Dominion Securities, Scotiabank and Stifel.

Revised recommendations

Month-to-date, two analysts have revised their expectations lower.

  • Berenberg’s Richard Hatch cut his target price to $39 from $44.
  • Raymond James’ Craig Stanley lowered his target price to 36 from $38.

Financial forecasts

The consensus cash flow per share estimate is US$3.52 in 2023 and US$4.27 in 2024.

Valuation

The stock is commonly valued by analysts on a price-to-net asset value basis.

According to Bloomberg, the average one-year target price is $39.82, implying the share price has 35 per cent upside potential over the next 12 months.

Chart watch

Year-to-date, the share price is up 2 per cent. However, over the past 10 trading sessions, the share price has rallied 16 per cent. Given the rapid rise in the share price, the stock has entered overbought territory with a relative strength index (RSI) reading of 72. Generally, an RSI reading at or above 70 reflects an overbought condition.

In terms of key resistance and support levels, the share price has a major ceiling of resistance around $36.50. In terms of downside support, there is initial support around $28, near its 200-day moving average (at $27.51). Failing that, there is strong technical support between $24 and $26.

Over the past three years, the share price has traded largely between $24 and $36 and is currently in the middle of this trading band.

ESG Risk Rating

According to Sustainalytics, the company has an environmental, social and governance (ESG) risk score of 23.1 as of Oct. 13, 2023. A risk score of between 20 and 30 reflects a “medium risk” rating.

POSITIVE BREAKOUTSOct. 20 close
AEM-TAgnico Eagle Mines Ltd $68.31
ABX-TBarrick Gold Corp $23.17
ELD-TEldorado Gold Corp $14.02
KEI-TKolibri Global Energy Inc. $6.48
LUG-TLundin Gold Inc $17.86
POM-TPolyMet Mining Corp. $2.88
NEGATIVE BREAKOUTS
ADN-TAcadian Timber Corp $16.06
AFN-TAg Growth International Inc $48.87
AGF-B-TAGF Management Ltd $6.52
AC-TAir Canada $16.78
BOS-TAirBoss of America Corp $3.85
AQN-TAlgonquin Power & Utilities Corp $6.88
ALYA-TAlithya Group Inc. $2.04
AP-UN-TAllied Properties REIT $16.25
AKE-TAllkem Limited $8.95
ARR-TAltius Renewable Royalties Corp. $7.12
AND-TAndlauer Healthcare Group Inc. $38.33
ADW-A-TAndrew Peller Ltd $4.03
AX-UN-TArtis Real Estate Investment Trust $6.00
ATS-TATS Corp. $48.59
APR-UN-TAutomotive Properties REIT $9.92
BLDP-TBallard Power Systems Inc $4.57
BMO-TBank of Montreal $106.27
BNS-TBank of Nova Scotia $56.68
BITF-TBitfarms Ltd. $1.28
BB-TBlackBerry Ltd $4.64
GBT-TBMTC Group Inc $12.20
BBD-B-TBombardier Inc $40.82
BLX-TBoralex Inc $25.73
BYD-TBoyd Group Services Inc. $232.14
BIP-UN-TBrookfield Infrastructure Partners LP $31.87
DOO-TBRP Inc $96.79
CAE-TCAE Inc $28.64
CGY-TCalian Group Ltd. $47.35
CF-TCanaccord Genuity Group Inc $7.10
CNE-TCanacol Energy Ltd $8.91
GOOS-TCanada Goose Holdings Inc. $16.66
CAR-UN-TCanadian Apartment Properties REIT $42.26
CTC-A-TCanadian Tire Corp Ltd $137.08
CFP-TCanfor Corp $14.20
CS-TCapstone Mining Corp $4.87
CAS-TCascades Inc $11.02
CHR-TChorus Aviation Inc $2.17
CIX-TCI Financial Corp $13.78
CM-TCIBC $48.67
CCA-TCogeco Communications Inc $57.19
CIGI-TColliers International Group Inc $119.66
CSW-A-TCorby Spirit and Wine Ltd $13.20
DIV-TDiversified Royalty Corp $2.43
MPCT-UN-TDream Impact Trust $5.90
DIR-UN-TDream Industrial REIT $11.96
D-UN-TDream Office Real Estate Investment Trust $8.16
DRM-TDREAM Unlimited Corp $16.89
DND-TDye & Durham Ltd. $10.85
ECN-TECN Capital Corp. $2.03
EFN-TElement Fleet Management Corp. $18.71
EMA-TEmera Inc $44.30
EQB-TEquitable Group Inc $69.14
ERO-TEro Copper Corp. $18.94
ERE-UN-TEuropean Residential REIT $2.24
EIF-TExchange Income Corp $43.53
EXRO-TExro Technologies Inc. $1.79
FIL-TFilo Mining Corp. $18.68
FTT-TFinning International Inc $38.54
FN-TFirst National Financial Corp $33.79
FSV-TFirstService Corp $190.81
GBU-XGabriel Resources Ltd $0.33
WN-TGeorge Weston Ltd $145.32
GFL-TGFL Environmental Inc. $41.21
GRT-UN-TGranite Real Estate Investment Trust $66.38
IAG-TiA Financial Corporation Inc. $79.49
IGM-TIGM Financial Inc $31.58
ILLM-Tillumin Holdings Inc. $1.57
ISV-TInformation Services Corp $20.37
INE-TInnergex Renewable Energy Inc $8.68
INO-UN-TInovalis REIT $2.59
IVN-TIvanhoe Mines Ltd $10.71
JWEL-TJamieson Wellness Inc. $23.42
KMP-UN-TKillam Apartment REIT $16.23
KXS-TKinaxis Inc $134.25
KSI-Tkneat.com Inc. $2.91
GUD-TKnight Therapeutics Inc $4.36
LB-TLaurentian Bank of Canada $25.57
LNF-TLeon's Furniture Ltd. $17.80
LIRC-TLithium Royalty Corp. $9.90
L-TLoblaw Cos Ltd $111.52
LUN-TLundin Mining Corp $8.69
MFI-TMaple Leaf Foods Inc $24.22
MOZ-TMarathon Gold Corporation $0.50
MRE-TMartinrea International Inc $11.44
MRD-TMelcor Developments Ltd $11.02
MRG-UN-TMorguard North American Residential REIT $14.20
NA-TNational Bank of Canada $85.15
NEO-TNeo Performance Materials Inc. $7.10
NOA-TNorth American Construction Group Ltd. $28.55
NPI-TNorthland Power Inc $20.05
NWH-UN-TNorthWest Healthcare Properties REIT $4.24
ONC-TOncolytics Biotech Inc $2.14
ONEX-TOnex Corp $75.10
OTEX-TOpen Text Corp $45.55
OGI-TOrganigram Holdings Inc. $1.45
PLC-TPark Lawn Corp. $17.26
PAY-TPayfare Inc. $4.71
PZA-TPizza Pizza Royalty Corp $13.09
PIF-TPolaris Infrastructure Inc. $13.10
POW-TPower Corp of Canada $32.99
PBH-TPremium Brands Holdings Corp $91.95
QBR-B-TQuebecor Inc $27.68
REAL-TReal Matters Inc. $5.00
REI-UN-TRioCan Real Estate Investment Trust $16.97
RCI-B-TRogers Communications Inc $50.52
RSI-TRogers Sugar Inc $5.17
RY-TRoyal Bank of Canada $111.08
RUS-TRussel Metals Inc $33.71
SAP-TSaputo Inc $26.89
SIS-TSavaria Corp. $12.56
SGML-XSigma Lithium Corp. $33.94
SOT-UN-TSlate Office REIT $1.22
ZZZ-TSleep Country Canada $21.86
STN-TStantec Inc $84.13
SLF-TSun Life Financial Inc $63.09
SPB-TSuperior Plus Corp $9.56
LCFS-TTidewater Renewables Ltd. $7.73
TLRY-TTilray Brands Inc. $2.51
TF-TTimbercreek Financial Corp. $6.26
TIH-TToromont Industries Ltd $104.50
TD-TToronto-Dominion Bank $78.71
TXP-TTouchstone Exploration Inc. $0.92
TA-TTransAlta Corp $10.56
TRZ-TTransat AT Inc $3.12
TCL-A-TTranscontinental Inc $10.46
TNT-UN-TTrue North Commercial REIT $2.00
VMD-TViemed Healthcare Inc. $8.66

Source: Bloomberg

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 29/02/24 4:00pm EST.

SymbolName% changeLast
EDV-T
Endeavour Mining Corp
+1.83%22.31

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