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Monday’s TSX breakouts: A stock from the top performing sector in 2017 with 11 ‘buy’ calls

Dividend policy

The company is focused on growth and currently does not pay its shareholders a dividend.

Financial forecasts

The Street is forecasting revenue of $227-million (U.S.) in fiscal 2018, up from $203.8-million in fiscal 2017, with revenue forecast to rise 11 per cent to $253-million in fiscal 2019. The consensus EBITDA estimate is $81-million in fiscal 2018, rising 14 per cent to $92-million the following fiscal year. The consensus EPS estimates are $1.05 in fiscal 2018 and $1.19 in fiscal 2019.

Earnings revisions

Earnings revisions have been positive with analysts revising their earnings forecasts higher. For instance, three months ago, the EBITDA estimates were $79-million for fiscal 2018 and $90-million for fiscal 2019. The consensus EPS estimates were 85 cents for fiscal 2018 and $1.06 for fiscal 2019.

Valuation

According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA (EV/EBITDA) multiple of 18 times the fiscal 2019 consensus estimate, slightly above its three-year historical average multiple of 17 times. Over the past three years, the stock has traded at a forward EV/EBITDA multiple principally between 14 times and 20 times.

Most analysts set their target prices in U.S. dollars. On Friday, the stock price closed at $22.40 (U.S.). Target prices, expressed in U.S. dollars, range from a low of $22.50 (at BMO Capital Markets), suggesting the stock is fully valued, to a high of $27 (at RBC Capital Markets), implying upside potential of over 20 per cent. Individual price targets provided by 13 firms are as follows in numerical order: $22.50, $23, $24, $24.50, three at $25, $25.16, $25.50, two at $26, $26.64, and $27.

When converted to Canadian dollars, the consensus one-year target price is $33.72, suggesting a potential price return of 12 per cent over the next 12 months.

Analysts’ recommendations

Since the beginning of 2017, 14 analysts have issued research reports on the company, 11 analysts have ‘buy’ recommendations and three analysts have ‘hold’ recommendations.

Chart watch

The long-term chart appears positive with the stock price in a firm uptrend.

On a shorter-term basis, the share price is up 5 per cent so far in 2017. However, since mid-2016, the share price has been locked in a trading range, primarily between $27 (Cdn) and $30, and is currently trading at the top end of this band.

If the share price can break above the $31 level, the stock price could rally to around $33.50.

Should the share price receded, there is initial support close to the $28 level, which is near its 200-day moving average (at $27.59) and also close to its 50-day moving average (at $28.70). Failing that, there is support around $26.

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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, 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.

Positive BreakoutsMarch 10 close ABT-TAbsolute Software Corp $7.52 ACO.X-TAtco Ltd $49.16 AUP-TAurinia Pharmaceuticals Inc $11.33 CNR-TCanadian National Railway Co $97.41 CUS-TCanexus Corp $1.65 CFX-TCanfor Pulp Products Inc $11.53 CCL.B-TCCL Industries Inc. $294.05 CHW-TChesswood Group Ltd $13.47 BCB-TCott Corp $16.52 CRH-TCRH Medical Corp $10.38 DSG-TDescartes Systems Group Inc $30.11 ECI-TEnercare Inc $20.08 ENGH-TEnghouse Systems Ltd $60.80 FSV-TFirstService Corp $76.59 GEI-TGibson Energy Inc $20.25 MRE-TMartinrea International Inc $9.79 MKP-TMCAN Mortgage Corp $15.19 NWH.UN-TNorthWest Healthcare Properties REIT $10.46 PBH-TPremium Brands Holdings Corp $71.94 SIS-TSavaria Corp. $12.50 SHOP-TShopify Inc. $86.35 TOY-TSpin Master Corp. $36.80 SVI-TStorageVault Canada Inc. $1.74 SPB-TSuperior Plus Corp $13.02 TH-TTheratechnologies Inc $5.12 RNW-TTransAlta Renewables Inc $15.09 TCL.A-TTranscontinental Inc $23.68 VNR-TValener Inc $21.53 VBV-TVBI Vaccines Inc $8.20 ZCL-TZCL Composites Inc. $13.23 Negative Breakouts ARX-TARC Resources Ltd $19.07 ATH-TAthabasca Oil Corp $1.49 BNP-TBonavista Energy Corp $3.54 CFW-TCalfrac Well Services Ltd $3.30 CAM-TCanam Group Inc $6.11 CJ-TCardinal Energy Ltd $7.58 DC.A-TDundee Corp $4.19 ECA-TEncana Corp $13.95 HRX-THeroux-Devtek Inc $12.63 H-THydro One Ltd. $23.10 III-TImperial Metals Corp $5.78 IDG-TIndigo Books & Music Inc $16.00 KEL-TKelt Exploration Ltd $5.96 LIQ-TLiquor Stores NA Ltd $9.18 MND-TMandalay Resources Corp $0.61 PDL-TNorth American Palladium Ltd $4.79 PGF-TPengrowth Energy Corp $1.48 PD-TPrecision Drilling Corp $6.12 VII-TSeven Generations Energy Ltd $22.28 SPE-TSpartan Energy Corp $2.48 THO-TTahoe Resources Inc $9.93 TVE-TTamarack Valley Energy Ltd. $2.73 TD-TToronto-Dominion Bank $66.00 TCW-TTrican Well Service Ltd $4.02 TDG-TTrinidad Drilling Ltd $2.20 VET-TVermilion Energy Inc $49.49 WJX-TWajax Corp $21.08 WRG-TWestern Energy Services Corp $2.33 XDC-TXtreme Drilling & Coil Services Corp $2.20

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