While the S&P/TSX composite index climbs higher, up 4.7 per cent year-to-date, the list of positive breakouts (securities with positive price momentum) is growing and now stands at 90 names, with just two stocks on the negative breakouts list (stocks with negative price momentum).
Discussed below is a top performing technology stock that has appreciated 45 per cent year-to-date, and it pays investors a dividend – Wi-Lan Inc. (WIN-T;WILN-Q). However, this stock's sensational rally may be due for a pause.
A brief outline is provided that may serve as a springboard for further fundamental research.
Wi-Lan is a patent licensing company. It manages and licenses intellectual property of companies from a variety of industries such as the automotive, television, Internet, medical and technology market segments. Wi-Lan will arrange with patent owners to protect and enforce their patents in exchange for a share of any potential monetary award.
On Feb. 4, the company announced fourth-quarter results that were ahead of expectations. Revenue was $26-million (U.S.), up 18 per cent year-over-year, exceeding the Street's expectations of $20.8-million. Earnings per share came in at 13 cents, above the consensus estimate of 9 cents. The company's balance sheet had cash and cash equivalents of $94.6-million as at Dec. 31, 2015. Management estimates the company's revenue backlog, representing forecast future revenue from signed patent license agreements, at year-end was between $175-million to $205-million.
In November, the company announced plans to cut its dividend stating, "The board believes this is a prudent step to support the company's efforts to adapt to an evolving and challenging patent licensing business environment and to position the company for long-term growth opportunities. Wi-Lan will focus its cash resources on monetizing its existing patent portfolio and acquiring other high quality patents, which in the view of management and the board, present the best use of capital to create value for shareholders." The stock price plunged on this news, but has since recovered all of these losses and is trading back to where it was prior to this announcement.
The quarterly dividend was reduced to 0.0125 cents per share from 0.0525 cents. This equates to a yearly rate of 5 cents per share, or an annualized yield of 1.9 per cent.
According to Bloomberg, there are three buy recommendations with the average one-year price target of $3.42 (Canadian), implying the shares may appreciate 28 per cent. However, this strong return is skewed by one target price. Individual target prices in Canadian dollars are as follows: $2.50, $2.75 and $5. There are no hold recommendations, nor sell recommendations.
Earnings are forecast to decline in 2016, not a positive characteristic. The consensus earnings per share forecast is 44 cents (U.S.) in 2016, and 43 cents in 2017.
On a long-term basis, the stock has been in a general downtrend since mid-2011. While the stock has rebounded 44 per cent so far this year, it is still too premature to call this stock a technical "buy."
There is overhead resistance around $3 (Canadian), and downside support around $2.50, then at $2.25, where its 200-day moving average lies. Failing that, there is support around $2, close to the stock's 50-day moving average (at $1.93).
The relative strength index is at 78, suggesting the shares are in overbought territory. Generally, a reading of 70 or higher indicates an overbought condition. That being said, a security can remain overbought for some time.
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.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
Below is a list of securities in the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Securities on the positive breakouts list have displayed positive price momentum during this period. Securities on negative breakouts list have experienced negative price momentum.
|ARE-T||Aecon Group Inc|
|AFN-T||Ag Growth International Inc|
|AP-U-T||Allied Properties REIT|
|ALS-T||Altius Minerals Corp|
|ARX-T||ARC Resources Ltd|
|AR-T||Argonaut Gold Inc|
|AX-U-T||Artis Real Estate Investment Trust|
|BMO-T||Bank of Montreal|
|BNS-T||Bank of Nova Scotia|
|BAM/A-T||Brookfield Asset Management Inc|
|CNR-T||Canadian National Railway|
|CNQ-T||Canadian Natural Resources Ltd|
|REF-U-T||Canadian Real Estate Investment Trust|
|CWB-T||Canadian Western Bank|
|CJ-T||Cardinal Energy Ltd|
|CCA-T||Cogeco Communications Inc|
|CUF-U-T||Cominar Real Estate Investment Trust|
|CMG-T||Computer Modelling Group Ltd|
|CPG-T||Crescent Point Energy Corp|
|CRR-U-T||Crombie Real Estate Investment Trust|
|DRG-U-T||Dream Global REIT|
|DIR-U-T||Dream Industrial REIT|
|D-U-T||Dream Office REIT|
|FSZ-T||Fiera Capital Corp|
|FCR-T||First Capital Realty Inc|
|FR-T||First Majestic Silver Corp|
|FN-T||First National Financial Corp|
|MIC-T||Genworth MI Canada Inc|
|WN-T||George Weston Ltd|
|GEI-T||Gibson Energy Inc|
|GWO-T||Great-West Lifeco Inc|
|GUY-T||Guyana Goldfields Inc|
|HR-U-T||H&R Real Estate Investment Trust|
|HCG-T||Home Capital Group Inc|
|IGM-T||IGM Financial Inc|
|INN-U-T||InnVest Real Estate Investment Trust|
|IFC-T||Intact Financial Corp|
|IPL-T||Inter Pipeline Ltd|
|PJC/A-T||Jean Coutu Group PJC Inc|
|KEL-T||Kelt Exploration Ltd|
|KGI-T||Kirkland Lake Gold Inc|
|LSG-T||Lake Shore Gold Corp|
|L-T||Loblaw Cos Ltd|
|LUN-T||Lundin Mining Corp|
|MAG-T||MAG Silver Corp|
|DR-T||Medical Facilities Corp|
|NA-T||National Bank of Canada|
|NFI-T||New Flyer Industries Inc|
|NPI-T||Northland Power Inc|
|NVU-U-T||Northview Apartment REIT|
|NWH-U-T||NorthWest Healthcare Properties REIT|
|PPY-T||Painted Pony Petroleum Ltd|
|POU-T||Paramount Resources Ltd|
|PXT-T||Parex Resources Inc|
|PPL-T||Pembina Pipeline Corp|
|POW-T||Power Corp of Canada|
|PWF-T||Power Financial Corp|
|REI-U-T||RioCan Real Estate Investment Trust|
|RCI/B-T||Rogers Communications Inc|
|RY-T||Royal Bank of Canada|
|SES-T||Secure Energy Services Inc|
|VII-T||Seven Generations Energy Ltd|
|SJR/B-T||Shaw Communications Inc|
|SIA-T||Sienna Senior Living Inc|
|SOT-U-T||Slate Office REIT|
|SRU-U-T||Smart Real Estate Investment Trust|
|SPE-T||Spartan Energy Corp|
|SOX-T||Stuart Olson Inc|
|STB-T||Student Transportation Inc|
|SU-T||Suncor Energy Inc|
|THO-T||Tahoe Resources Inc|
|TCK/B-T||Teck Resources Ltd|
|X-T||TMX Group Ltd|
|TOG-T||TORC Oil & Gas Ltd|
|TRQ-T||Turquoise Hill Resources Ltd|
|VET-T||Vermilion Energy Inc|
|WPT-T||Westport Innovations Inc|
|WB-T||Whistler Blackcomb Holdings Inc|
|Y-T||Yellow Pages Ltd|
|VRX-T||Valeant Pharmaceuticals International In|
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