Skip to main content

The Globe and Mail

Jean Coutu: Well, at least there's the dividend

An exterior shot of Jean Coutu store in Longueuil, Quebec, May 2, 2012.

Christinne Muschi/The Globe and Mail

Hi Lou:

What do you think of Jean Coutu? Is it time to take profit or continue to hold?

Thanks,

Story continues below advertisement

Humayun

Hey Humayun,

Thanks for the assignment.

Jean Coutu Group Inc. operates 411 pharmacies with 92 per cent in the province of Quebec. The research conducted on your behalf indicates that the company announced a share buyback and a special dividend to shareholders in October. The company had held over $450-million in cash as the results of the sale of its 28 per cent stake in Rite Aid Corp. With a lack of debt the company could also be looking for strategic acquisitions to bolster their position in an increasingly competitive retail environment.

A study of the charts will add some new insight to your decision.

The three-year chart outlines a healthy advance from the lows near $9.00 in late 2010. What is evident is that the shares hit resistance near $19.00 in the summer of 2013 as the RSI and the MACD generated sell signals. PJC.A pulled back to $17.25 by September where it caught a bounce to trade back above the 50-day moving average.

The six-month chart indicates that the MACD and the RSI are not generating much in the way of signals to buy or sell. The trend is gently higher from the September lows near $17.25. At this point there is no strong evidence to support a buy or a sell so at best PJC.A is a hold. The dividend yield is 1.88 per cent which will at least generate income if you decide to hold.

Story continues below advertisement

What you should also review in making your final decision on this stock is what attracted you to it in the first place. Over the last year the market has seen Target open in Canada and Loblaw buy Shoppers -- both of which turn up the competitive heat. In addition, generic drugs have eaten into PJC.A's revenue.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

Report an error
About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.