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Dear Mr. Schizas,
I would like your analysis of Canaccord Genuity. I think I see a breakout from a symmetrical triangle, but I am concerned the financial sector as a whole is rolling over and I would be swimming upstream.
Thank you,
Joe
Hey Joe,
Thanks for the assignment.
Canaccord Genuity Group Inc. is a leading independent brokerage and benefits when companies are looking for financing. The breakout you mentioned came on Feb. 5, 2014, as the company reported quarterly results that beat expectations. Cited in the report were the better than expected performance of operations in the United Kingdom and Europe.
An inspection of the charts will lay the groundwork of my analysis.
The three-year chart describes a stock that broke out of an aggressive downtrend in August of 2012 and offered some trading opportunities through August of 2013 after which it traded in a range between $6.00 and $7.00 until January of 2014.
The MACD and the RSI on the six-month chart provided a clear buy signal in December of 2013 as the shares moved off of support at $6.00. A golden cross surfaced by the end of the month indicating that there was more to come. The gap up on the release of third quarter results on Feb. 5, 2014, has the stock positioned to attract more investor interest. On Feb. 6, 2014, the Wall Street Journal reported that there was an upgrade of the shares at TD to a buy from a hold and and increase in the target price to $9.50 from $8.50.
Your concern about a rollover in the financial sector may be discounting the ability of an independent brokerage with an entrepreneurial culture to outperform their larger, less nimble competition. A move through resistance at $8.00 would set the shares up for a test of resistance at $9.00. Not to be ignored is the yield of 2.53 per cent on the dividend.
Make it a profitable day and happy capitalism!
Have your own question for Lou? Send it in to lschizas@globeandmail.com.
Lou Schizas