On today’s TSX Breakouts report, there are 53 stocks on the positive breakouts list (stocks with positive price momentum), and 12 stocks are on the negative breakouts list (stocks with negative price momentum).
Discussed today is a stock whose share price has fallen 7 per cent since closing at a record high in early February. If downward pressure continues, the stock may soon appear on the negative breakouts list. The stock is nearing oversold territory and may soon find support at it approaches a key technical support level. This small-cap stock is covered by seven analysts, of which six analysts have buy recommendation. With a reasonable valuation, the anticipated one-year price return is over 27 per cent. The security highlighted below is StorageVault Canada Inc. (SVI-X).
A brief outline is provided below that may serve as a springboard for further fundamental research.
Headquartered in Toronto, StorageVault operates storage centres across the country, providing self-storage facilities, portable storage containers, moving containers, and storage for boats, RV’s, trailers and cars. The company operates over 160 storage locations that are located across seven provinces: Ontario, Alberta, Québec, B.C., Manitoba, Saskatchewan and Nova Scotia. The company has operations under the following banners: Access Storage, Storage For Your Life, Depotium Mini-Entrepots, and Sentinel Storage. The company offers customers short and long-term contracts. Generally, storage spaces are rented under weekly or monthly rental terms. There is seasonality in the business. Historically, in terms of occupancies and revenue per square foot, the second and third quarters have been the strongest of the four quarters boosted by warmer weather conditions.
On Feb. 27, the company reported revenue of $26.6-million, up from $20.7-million reported during the same period last year. Funds from operations (FFO) came in at 2 cents per share in the fourth quarter and at 8 cents per share for fiscal 2018. Growth, both organic (internal) and acquisition, are key objectives by management. In the earnings release, the company’s chief financial officer Iqbal Khan remarked, “Looking ahead, we expect to acquire $50 million of assets in addition to the $275-million Real Storage portfolio, add 50,000 square feet of expansion space, and continue to increase our cash flow through operating efficiencies and revenue management.”
On Feb.6, the company announced the acquisition of Real Storage with its 38 stores located across four provinces: 25 stores in Ontario, 11 stores located in Alberta, one store in B.C. and one store in Manitoba. The deal expected to be completed this month.
On Feb. 20, the company completed a $10.5-million acquisition of two stores located in Ontario.
StorageVault is expected to report its first-quarter financial results in May.
Management is focused on growth, and as a result, the dividend yield is quite low. The company pays its shareholders a quarterly dividend of 0.2614 cents per share, or approximately 1 cent per share on a yearly basis. This translates to an annualized dividend yield of 0.4 per cent.
This small-cap stock with a market capitalization of $940-million is covered by seven analysts, of which six analysts have buy recommendations and one analyst (Brendon Abrams at Canaccord Genuity) has a “hold” recommendation.
The firms providing research coverage on the company are as follows in alphabetical order: Canaccord Genuity, Cormark Securities, GMP, Industrial Alliance Securities, National Bank Financial, Raymond James and TD Securities.
In March, Jonathan Kelcher, an analyst at TD Securities, lifted his target price to $3.50 from $3.25 as did Raymond James’ Johann Rodrigues.
In February, Canaccord Genuity’s Brendon Abrams raised his target price to $3 (the low on the Street) from $2.65 but maintained his ‘hold’ recommendation. Cormark Securities’ Maggie MacDougall, tweaked her target price higher by 10 cents to $3.50. Brad Sturges, an analyst at Industrial Alliance Securities upgraded his recommendation to a ‘buy’ from a ‘hold’ and raised his target price to $3.25 from $3.
The consensus AFFO and FFO per share estimates are 11 cents for 2019 and 13 cents for 2020.
Financial forecasts have been stable. For instance, three months ago, the consensus AFFO per share estimates were 11 cents for 2019 and 12 cents for 2020.
The stock is trading at a price-to-AFFO multiple of 24 times the 2019 consensus estimate, a discount to its historical multiple.
There are no direct peers that are publicly traded in Canada. However, in the U.S., Public Storage Inc. (PSA-NYSE) trades at a forward P/AFFO multiple of over 20 times the 2019 consensus estimate, according to Thomson Reuters Eikon.
The consensus one-year target price for shares of StorageVault is $3.36, suggesting the stock price has 27 per cent upside potential over the next 12 months.
Individual target prices are as follows in numerical order: $3 (the low on the Street is from Brendon Abrams, the analyst at Canaccord Genuity), two at $3.25, and four at $3.50.
Insider transaction activity
Year-to-date, only one insider has traded shares in the public market –relatively small transactions. On Feb. 8, insider John Drake sold 9,000 shares and on Feb. 7, he divested 1,000 shares.
Year-to-date, the share price is up over 10 per cent. However, the share price has declined 7 per cent since setting its record closing high of $2.85 on Feb. 6. The stock is approaching oversold territory with the relative strength index (RSI) at 36. Generally, an RSI reading at or below 30 indicates an oversold condition.
For the past two years, the share price has been consolidating, trading sideways, principally between $2.20 and $2.80, digesting its parabolic move experienced between early 2016 through to early 2017. In early 2016, the share price was around 70 cents and just over a year later, the share price had soared to over $2.50.
In terms of key resistance and support levels, the stock price has major resistance between $2.80 and $2.85. Looking at the downside, there is technical support around $2.60, near its 200-day moving average (at $2.61). Failing that, there is support around $2.50.
This small-cap security has reasonable liquidity. The three-month historical daily average trading volume is approximately 484,000 shares.
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.