Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

On today’s TSX Breakouts report, there are 46 stocks on the positive breakouts list (stocks with positive price momentum), and 30 securities are on the negative breakouts list (stocks with negative price momentum).

I try to feature a wide range of companies in order to appeal to a variety of investors.

Discussed today is a small-cap technology company that is on the positive breakouts list. Given that the company is not yet profitable, it may be best suited for consideration by investors with a high risk tolerance. Year-to-date, the share price has rallied nearly 17 per cent with a further 45 per cent gain anticipated by analysts. Over the past five trading sessions, the share price has spiked 9 per cent. As a result, the stock price may fill in this gap and could retreat to the $7 level in the near-term.

Story continues below advertisement

The security highlighted today is Blackline Safety Corp. (BLN-X).

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

The company

Calgary-based Blackline Safety manufactures safety monitoring products providing live-monitoring and wireless gas detection wearable devices. The company’s products are used in various industries including the energy sector, utilities, water/wastewater, industrials, and the engineering and construction market segments.

In terms of geographical revenue breakdown, in fiscal 2019, 39 per cent of the company’s sales came from the U.S., 36 per cent from Canada, 21 per cent from Europe, 2 per cent from Australia and New Zealand, and 2 per cent of sales came from other international markets.

On Jan. 30, the company reported its fourth-quarter financial results (the company’s fiscal year end is Oct. 31). Revenue came in at $10.7-million, up 94 per cent from $5.5-million reported during the same period last year, beating the consensus estimate of $8.4-million. Recurring service revenue totaled $5.1-million, representing 48 per cent of total revenue (gross margin was 68 per cent), while product revenue totaled $5.6-million, accounting for 52 per cent of total revenue (gross margin was 29 per cent). Gross margin expanded to 47 per cent from 45 per cent last year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at $155-thousand, marking the fourth consecutive quarter of positive adjusted EBITDA. Blackline is not yet profitable, reporting a loss per share of 6 cents. At quarter-end, the company had cash and cash equivalents and short-term investments of $30.6-million. That day, the share price rallied 3 per cent.

During the fourth-quarter, the company was awarded a $3.4-million contract with a U.K. water/wastewater utility. This was the third U.K. water utility to award a contract to Blackline. In the third-quarter, Blackline received a $1.1-million order from Welsh Water, and during the second quarter, the company was awarded a $1.9-million order from Yorkshire Water.

Story continues below advertisement

In a news release issued on Oct. 22, Mark Haylett, the sales manager at Blackline Safety Europe remarked, “G7c wearables will help to keep utilities personnel safe while they deliver clean drinking water to homes and businesses. Having won all three major U.K. water and sewerage contracts tendered this year, G7c has proven to deliver an unbeatable combination of features and capabilities far superior to competitor offerings.”

The company did not host an earnings call.

Dividend policy

Management is focused on growing the company and becoming profitable. As a result, the company does not pay its shareholders a dividend.

Analysts’ recommendations

There are three analysts that cover this small-cap stock with a market capitalization of $347-million, of which two analysts have buy recommendations and Gabriel Leung, the analyst at Beacon Securities, has a ‘speculative buy’ recommendation.

Story continues below advertisement

Firms providing research coverage on the company are as follows in alphabetical order: Beacon Securities, PI Financial, and Raymond James.

Revised recommendations

Earlier this month, Beacon Securities’ Gabriel Leung increased his target price to $10 from $8.25.

Late last month, Raymond James’ Ben Cherniavsky lifted his target price to $10 from $9. PI Financial’s David Kwan hiked his target price to $11.50 from $9.

Financial forecasts

The Street is forecasting robust top line growth for the company. The consensus revenue estimate is $56-million in fiscal 2020, up from a record $33-million reported in fiscal 2019, and forecast to rise to $91-million in fiscal 2021. The company is anticipated to reported positive earnings per share in fiscal 2021.

Story continues below advertisement

Valuation

The company is anticipated to be profitable in 2021. Consequently, the stock is commonly valued using a DCF (discounted cash flow) valuation method.

The consensus one-year target price is $10.50, implying the stock price may appreciate nearly 45 per cent over the next 12 months. Individual target prices in numerical order are as follows: two at $10, and $11.50.

Insider transaction activity

Looking back over the past five months, only one insider has reported trades in the public market.

On Jan. 14 and Jan. 15, director Dr. John Finbow purchased a total of 3,940 shares at an average price per share of approximately $6.54 for three accounts in which he has control or direction over. The cost of these investments exceeded $25,000.

Story continues below advertisement

Chart watch

Year-to-date, the share price for this technology stock is up nearly 17 per cent, closing at a record high of $7.25 on Tuesday on high volume with over 207,000 shares traded.

The share price has rallied 9 per cent over the past five trading days and may need to pause and digest these gains. Consequently, in the near-term, the share price may settle around the $7 level.

Liquidity can be quite low for this stock, which can create price volatility. The three-month daily average trading volume is under 20,000 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.

Story continues below advertisement

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.

Positive BreakoutsFeb. 4 close
AD-TAlaris Royalty Corp $22.70
ATD-B-TAlimentation Couche-Tard Inc $45.23
APS-TAptose Biosciences Inc $9.52
ATZ-TAritzia Inc. $25.92
BLN-TBlackline Safety Corp. $7.25
BLX-TBoralex Inc $27.92
BAM-A-TBrookfield Asset Management Inc $83.30
BEP-UN-TBrookfield Renewable Energy Partners LP $65.70
DOO-TBRP Inc $69.84
CAE-TCAE Inc $40.00
CGY-TCalian Group Ltd. $44.50
CJT-TCargojet Inc $119.37
CDAY-TCeridian HCM Holding Inc. $103.79
CIX-TCI Financial Corp $23.66
CIGI-TColliers International Group Inc $111.09
CSU-TConstellation Software Inc $1,458.77
BCB-TCott Corp $20.56
CRH-TCRH Medical Corp $5.51
DSG-TDescartes Systems Group Inc $62.26
ECN-TECN Capital Corp. $6.00
EFN-TElement Fleet Management Corp. $12.91
ENB-TEnbridge Inc $54.78
ENGH-TEnghouse Systems Ltd $54.22
FSV-TFirstService Corp $134.02
GRT-UN-TGranite Real Estate Investment Trust $73.00
IFC-TIntact Financial Corp $145.53
JWEL-TJamieson Wellness Inc. $27.50
KXS-TKinaxis Inc $115.41
KPT-TKP Tissue Inc $10.65
LAC-TLithium Americas Corp $5.71
MSI-TMorneau Shepell Inc $35.21
NFI-TNew Flyer Industries Inc $32.86
PPL-TPembina Pipeline Corp $51.06
PBH-TPremium Brands Holdings Corp $98.31
REAL-TReal Matters Inc. $14.24
SHOP-TShopify Inc $644.73
SNC-TSNC-Lavalin Group Inc $32.08
STN-TStantec Inc $40.45
SMU-UN-TSummit Industrial Income REIT $13.13
TRI-TThomson Reuters Corp $108.29
X-TTMX Group Ltd $125.49
TCL-A-TTranscontinental Inc $16.64
UNS-TUni-Select Inc $12.98
WCN-TWaste Connections Inc. $131.82
XBC-TXebec Adsorption Inc. $3.30
Y-TYellow Pages Ltd $10.81
Negative Breakouts
ASR-TAlacer Gold Corp $5.77
AR-TArgonaut Gold Inc $1.55
GIB-A-TCGI Group Inc $101.23
CHE-UN-TChemtrade Logistics Income Fund $8.92
CPG-TCrescent Point Energy Corp $4.16
ELD-TEldorado Gold Corp $8.81
EFX-TEnerflex Ltd $9.99
ERF-TEnerplus Corp $6.49
FAH-U-TFairfax Africa Holdings Corp. $5.74
FR-TFirst Majestic Silver Corp $12.64
FN-TFirst National Financial Corp $37.82
GSC-TGolden Star Resources Ltd. $3.84
HSE-THusky Energy Inc $8.51
IMG-TIAMGOLD Corp $3.74
KL-TKirkland Lake Gold Inc $51.34
MDI-TMajor Drilling Group International Inc $5.20
DR-TMedical Facilities Corp $4.07
NOA-TNorth American Construction Group Ltd. $13.98
NVA-TNuVista Energy Ltd $2.11
POU-TParamount Resources Ltd $5.67
PG-TPremier Gold Mines Ltd $1.55
RFP-TResolute Forest Products Inc. $4.00
VII-TSeven Generations Energy Ltd $6.37
SCL-TShawCor Ltd $10.07
SU-TSuncor Energy Inc $39.86
TVE-TTamarack Valley Energy Ltd. $1.65
TMR-TTMAC Resources Inc. $2.51
TXG-TTorex Gold Resources Inc $17.34
WEF-TWestern Forest Products Inc $1.06
WTE-TWestshore Terminals Investment Corp $15.98

Source: Bloomberg

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies